Annual Report 2012 - Cosmo Pharmaceuticals NV

Transcription

Annual Report 2012
“Cosmo attained three
critical milestones, this is a
big step in transforming
your Company from a contract drug manufacturer into
a specialty pharma company
with unique competence
in providing solutions for
colon diseases.”
Mauro S. Ajani
Chairman of the Board &
Chief Executive Officer
Cosmo at a glance
Cosmo Pharmaceuticals S.p.A. is a specialty pharmaceutical company headquartered in Lainate, Milan, Italy, and is listed on the SIX Swiss Exchange
(SIX: COPN).
Cosmo’s objective is to become a global leader in the field of optimized therapies for selected gastrointestinal and selected topically treated skin disorders.
The Company’s clinical development pipeline specifically addresses innovative
treatments for Inflammatory Bowel Diseases (IBD), colorectal cancer diagnosis
and a new chemical entity that is being developed for the topical treatment of
Acne, Alopecia and Hirsutism.
Cosmo’s proprietary multimatrix technology, MMX®, provides an excellent
base for the development of new, patentable, yet low-risk products, manufactured at the Company’s own GMP-approved plant. Currently, Cosmo, through
its appointed partners, has three products on the market and six in clinical
development.
Cosmo’s pipeline
Phase
Product
Drug type
Lialda®/ Mezavant®/ Mesavancol®
Mild to moderate Ulcerative Colitis
5-ASA
Zacol NMX®
Intestinal Disorders (nutraceutical)
Dietary supplement
Budesonide MMX®
Corticosteroid
Rifamycin SV MMX®
Travellers’ Diarrhoea
Antibiotic
I
II
III
MA
Launch partner
US, EU Giuliani/Shire
Italy, Eastern Europe Dr. Falk
Santarus: US
Ferring: Worldwide
(excluding Japan
EU Q4 2013 and US)
US Feb 2013
US
EU 1/13
CB-17-01
Diagnostic
• Chromoendoscopy for colorectal
cancer prevention in surveillance
patients
Santarus: US
Dr. Falk Pharma:
Europe (excluding
Italy) andAustralia
H2/13
H1/14
cancer prevention in UC patients
CB-03-01 (NCE)
Acne
Steroid ester,
androgen antagonist
CB-03-01 (NCE)
Alopecia
Steroid ester,
androgen antagonist
LMW Heparin MMX®
• Induction of remission in UC
Biologic
H1/14
POC H1/15
Licensed out
worldwide
Medicis/Valeant
Licensed out
worldwide
Medicis/Valeant
• Maintenance treatment for UC
CB-01-16
Opioid-Induced Constipation
before 2012
2012
Opioids antagonist
H2/13
current and prospective
Key events in 2012
_ Lialda® continued its strong growth and Shire attained net revenues of USD
399.8 million in 2012.
_ Budesonide MMX® was approved as Uceris™ for marketing in the USA for
the treatment of patients with mild to moderate Ulcerative Colitis by the
FDA post year end on 14 January 2013 and approved as Cortiment™ for marketing in the Netherlands by the MEB on 31 January 2013.
_ Rifamycin SV MMX® clinical end points were attained in phase III clinical
trials in the US. Phase III clinical trial in the EU is still ongoing.
_ Methylene Blue MMX® phase II clinical trials for colon cancer screening
and for phase II colon cancer diagnosis in patients with long-standing
ulcerative colitis were completed in Italy.
_ CB-03-01 licensing agreement was signed with Medicis (now Valeant) for
worldwide rights for both Acne and Alopecia. Phase II clinical trials have
been initiated in the US.
Key facts
_ Income from royalties increased by 16.2% to EUR 11.7 million.
_ Cosmo continued manufacturing 100% of Lialda® Mezavant®/Mesavancol®;
manufacturing revenues increased by 35.2% to EUR 14.6 million, manufacturing volumes by 39.4%.
_ Contract drug manufacturing revenues of third-party products declined
slightly by 3.1% to EUR 10.6 million.
_ One-time license and up-front fees and milestone income reached EUR 21.9
million because a milestone of USD 4 million came due at filing of Uceris™
in the US and USD 25 million were received at signing of the licensing
agreement for CB-03-01.
_ Net profit reached EUR 19.3 million in 2012, an increase by 154.1%.
_ Cash and cash equivalents increased by 100.4% to EUR 27.3 million. Our
investment in Santarus shares increased by 267.6% to EUR 65.6 million
because the USD 4 million milestone was taken in shares (at a price of
USD 4.41) and the share price of Santarus increased from USD 3.31 to
USD 10.98.
Key figures
2012
2011
2010
59,537
33,509
32,050
Cost of sales
(16,259)
(14,492)
(14,326)
R&D costs
(10,916)
(5,173)
(6,779)
SG&A costs
(5,977)
(5,692)
(6,218)
Operating result
26,455
8,908
4,802
Profit before taxes
26,888
9,093
4,459
Profit after taxes for the period
19,324
7,606
3,607
111,865
49,441
48,385
Cash and cash equivalents
27,302
13,624
28,351
Other current assets
12,678
14,973
15,089
Liabilities
27,244
14,604
33,459
124,391
63,190
58,065
82%
81%
63%
13,700,210
14,436,176
14,620,679
1.410
0.526
0.247
EUR 1,000
Income statements
Revenues
Balance sheet
Non-current assets
Equity attributable to owners
of the Company
Equity ratio (in %)
Shares
Weighted average number of shares
Earnings per share (in EUR)
Cosmo at a glance – Cosmo Pharmaceuticals Annual Report 2012 1
Visual concept
In developing our colon competence we decided to
seek the advice from some of the world’s most
renowned colon specialists. It is with their advice
and insight that we identified the right areas to
focus, moved along in our drug development and
managed our clinical trials. A special tribute is due to
them.
Contents
Cosmo at a glance
1
Letter to Shareholders
5
Strategy
12
Market overview
19
Scientific Advisory Board
38
Research and development
25
Risk management
40
Corporate governance
50
Group structure and shareholders
50
Capital structure
52
Board of Directors
54
Executive Management
61
Compensation, shareholdings and loans
66
Shareholders’ rights
71
Operating principles and activities
42
Independent Auditors
73
Change of control and defense measures
74
Information policy
74
Financial review
76
Consolidated financial statements
82
Consolidated financial statements as of 31 December 2012
82
Notes to the consolidated financial statements as of 31 December 2012
88
Auditors’ report
144
Information for investors
146
Glossary
148
Forward-looking statements
153
Contacts and addresses
154
Contents – Cosmo Pharmaceuticals Annual Report 2012 3
Dear Shareholder
In 2012 we attained three critical milestones and thus made a big step in transforming your Company into a specialty pharma company that has a unique
competence in providing solutions for colon diseases. The bulk of your Company’s uniqueness lies in its knowledge of the colon and the MMX® technology.
It has been the Board’s intention to identify new colon applications that can be
Mauro S. Ajani
treated with the MMX® technology and to create a whole range of MMX® products in order to have a broad revenue base; in doing this the Board has maintained that the development cost of projects needs to be limited to the funds
that are available internally. Every product is developed to the point of where
our competence reaches and then a partner is sought. I am very proud to confirm
that we continue delivering on this strategy. During 2012 we attained three
critical milestones which attest that the process of transforming your Company
from a contract manufacturer into a product development and manufacturing
entity that allows the generation of substantially higher revenue and extraordinary profitability is proceeding as planned.
Throughout the year we and our licensee in the USA, Santarus, progressed
the approval process of Uceris™ in the USA and Cortiment™ in the EU in such
a way that the FDA approved Uceris™ on 14 January 2013 and the MEB approved
Cortiment™ for the Netherlands within the national phase procedure on 31 January
2012 was another very
2013. These approvals validate the MMX® technology and give your Company a
good year for Cosmo.
second revenue leg for which we have great hopes. Furthermore on 2 April 2012
Our proprietary products
we signed a worldwide licensing agreement with Medicis, the leading Acne
continued increasing
company in the USA, for CB-03-01 and throughout the year we continued
market share, our most
developing CB-17-01, our colon cancer diagnostic to the point where we are now
important products
poised to start phase III clinical trials both in the USA and Europe.
under development made
Lialda®, our first product in the market, continued its growth path. Overall
significant progress and
revenues in the markets increased by 7.4% to USD 399.8 million. Our Lialda®/
we generated record
Mezavant®/Mesavancol® income from royalties increased by 16.2% to EUR 11.7
profits.
million and our corresponding income from manufacturing increased by 35.2%
to EUR 14.6 million.
The approval processes for Budesonide MMX® were challenging. On 9 August
2012 we informed that the Dutch Regulatory Agency (MEB) acting as reference
member for 14 other European countries declined the approval of Cortiment™
as the drug is called in Europe, citing lack of clinical relevance. We filed a note
of objection to this decision, pointing out that the clinical endpoints were met
with excellent statistical relevance and, after a lengthy reconsideration process, the MEB approved Cortiment™ on 31 January 2013. On 14 August 2012 the
FDA announced that they were delaying the PDUFA from 16 October to 16 January
2013 because some information that had been provided was considered new
and called for an additional three-month review process. In order to reduce the
delay in time to market, Santarus was however able to conduct negotiations on
Letter to Shareholders – Cosmo Pharmaceuticals Annual Report 2012 5
the label during December and on 14 January 2013, the FDA granted the New
Drug Application (NDA) approval. Thanks to extremely focused work by the
Santarus sales organization Uceris™ was then launched on 13 February 2013.
You will recall that we licensed out Rifamycin SV MMX® to Santarus (for
the USA) and Dr. Falk Pharma (for Europe) and that the phase III clinical trials
are being conducted by our licensees at their costs. On 12 September 2012 we
informed that Santarus had obtained positive results in its phase III clinical
trial of Rifamycin SV MMX® for Travellers’ Diarrhoea. Santarus however needs
the data from a second pivotal trial being conducted by Dr. Falk Pharma in
order to file the NDA. This second pivotal trial is incurring delays. Dr. Falk
Pharma decided to recruit additional patients and needed to refile approval of
the trial in India. Indian authorities have delayed the approval of this and all
other trials pending an investigation into practices in the responsible bodies
in India. Dr. Falk believes that it will be able to complete the trials in 2013.
In 2012 we dedicated our product development efforts mainly to the development of Methylene Blue MMX® and CB-03-01. Colon cancer is one of the costliest and deadliest cancers because less than 10% of cancers are discovered in
stage I. Gastroenterologists believe that 75–90% of colon cancers could be
avoided by early detection. The best method for early detection is colonoscopy
but even experienced gastroenterologists miss up to ⅓ of all polyps which are
the precursors of colon cancer. In order to increase detection, chromoendoscopy, where suspicious areas in the colon are sprayed with a methylene blue
dye through a catheter accompanying the endoscope, has been in use for more
than 30 years. The dyeing of the polyps and adenomas clearly makes their
detection easier. Nevertheless the procedure never gained strong user support
because it is time consuming and messy. Our Methylene Blue MMX® tablets are
targeted to address the three weaknesses of chromoendoscopy: it takes too
much time, it is messy and it is subjective. Since the patient is scheduled to
take the tablets at the same time as the colon-cleansing prep, the colon is dyed
at the time the gastroenterologist starts the colonoscopy. Furthermore the
entire colon is stained, so there is no subjectivity. This means that the gastroenterologist can immediately focus on the task of finding polyps and adenomas
and can perform the task faster. What is more, since the stain is not liquid as in
the chromoendoscopy, it is not messy. In 2012 we conducted two phase IIb trials
at Istituto Humanitas in Rozzano close to Milan in Italy. One was for patients
that have had IBD for more than 8 years (these patients have a higher risk of
getting colon cancer) and the other was for patients undergoing routine colonoscopy for colon cancer screening. The results of both trials convinced us that
we are developing a product that improves polyp and adenoma detection rates
substantially and we thus immediately started preparations for the phase III
trials. These have been designed, the CROs determined, the sites selected.
6 Cosmo Pharmaceuticals Annual Report 2012 – Letter to Shareholders
In order to reduce the regulatory risk we filed an SPA with the FDA and are presently discussing this with them. We expect to start the trials in Q2 2013 and
could have data by the end of the year. We are very pleased with this new development because it has allowed us to enter the vast and unattended colon cancer
diagnostic market without giving up our core competence: the MMX® technology and the way the colon works. The market is vast: in 2013 it is expected that
more than 30 million colonoscopies will be performed in the seven major markets.
Last year we informed you that we intended to license out CB-03-01 at an
early stage because the product was targeted at indications such as Acne,
Alopecia, and Hirsutism where we felt we lacked competence. After getting
approval of the IND by the FDA in March 2012 we signed an agreement with
Intrepid Therapeutics, a company consisting of various specialists with extensive
experience in the development of skin products. It is Intrepid’s task to assist
us in the phase II dose ranging clinical trials which are ongoing in the US at this
time. On 30 March 2012 we then signed a worldwide licensing agreement with
Medicis, the leading Acne company in the USA. We will be developing the
product through phase II dose ranging trial ourselves together with Intrepid.
We got an up-front payment of USD 25 million, however we will be bearing the
Our financial position
phase II clinical trial costs. Medicis, respectively Valeant who purchased Medicis
continues to be strong:
in late 2012 will then take over development in phase III.
in 2012 we generated
The Company’s manufacturing facilities, office building and the surround-
operating cash of EUR
ing real estate belonged to Cristoforo Colombo Real Estate S.r.l. (CCRE). With
23.0 million and at year
high growth in the existing product base and a rapidly developing product pipe-
end we had EUR 27.3
line that would require additional investments in manufacturing capacity, the
million cash; this cash
Board felt it prudent to get total control of the manufacturing site. CCRE was
reserve is additionally
thus approached with the objective of purchasing the company. The cost of
bolstered by our invest-
EUR 13.1 million was then established on the basis of a valuation made by well-
ment in Santarus shares
known real estate valuers and was paid in cash and treasury shares.
which amounted to EUR
As foreseen in our last year’s message to you we also invested into the plant
65.6 million at year end.
expansion by building a totally new manufacturing department dedicated to
Furthermore the Com-
the production of Uceris™ and Cortiment™.
pany held 993,889 treasury shares.
The milestones and license fees (for the filing of the NDA of Uceris™ and for
the signing of CB-03-01) totaling EUR 21.9 million lifted our income substantially above historical levels. Our overall revenue increased by 77.7% to EUR 59.5
million. The manufacturing of MMX® products increased by 36.0% to EUR 14.7
million and MMX®-based royalties increased by 16.2% to EUR 11.7 million, but
contract drug manufacturing income declined slightly by 3.1% to EUR 10.6 million, reflecting a relative stagnation in the general pharmaceutical market in
southern Europe. At the same time we managed to keep costs under control.
While total net operating expenses increased by 34.5% to EUR 33.1 million, the
bulk of the increase came from outsourced clinical trial expenses. Costs of sales
increased by only 12.2% to EUR 16.3 million, selling, general and administrative
expenses increased by 5.0% to EUR 6.0 million while, as mentioned above,
research and development costs jumped by 111.0% to EUR 10.9 million primarily because of the clinical development costs of CB-03-01 and CB-17-01. All in all
we had a record-breaking operating result which increased by 197.0% to EUR
26.5 million.
Additionally our investment in Santarus saw a substantial positive revaluation. At year end 2011 we held 6,972,132 Santarus shares, each valued at USD
3.31. In February 2012 we again opted to take the USD 4 million milestone payment due upon the FDA acceptance for review of the NDA filing of Uceris™ in
Santarus shares. During the year a series of positive events occurred at SanOur key priorities for
tarus and this caused a substantial increase of the share price to USD 10.88 at
2013 are to start and com-
year end 2012. At year end 2012 the Company held 7,878,544 Santarus shares and
plete the phase III clini-
was the largest shareholder in Santarus, holding 12.4%. In February 2013, with
cal trials for CB-17-01,
the first sale of Uceris™ a further USD 7 million were due to the Company as a
Methylene Blue MMX®,
milestone. The Company has the option to receive these as shares and needs to
and to complete the
decide on this by 15 April 2013.
phase II dose escalating
trial of CB-03-01 for Acne. Key priorities and strategy for 2013
Since the sales process for Uceris™ and Cortiment™ are in the hands of Santarus
and Ferring, and since we have no influence on the clinical trials for Rifamycin
SV MMX®, our key priorities for 2013 are to start and complete the phase III clinical trials for CB-17-01, Methylene Blue MMX®, and to complete the phase II dose
escalating trial of CB-03-01 for Acne. We will also explore selective new MMX®
product ideas, amongst other the application of our technology for the delivery
of antibodies to the colon.
8 Cosmo Pharmaceuticals Annual Report 2012 – Letter to Shareholders
Outlook
We expect overall revenues to increase by around 12% based on another slight
increase of revenues from royalties and manufacturing of Lialda®/Mezavant®/
Mesavancol®, first time revenues from the sale of Uceris™ and Cortiment™,
stable contract drug manufacturing revenues and milestones that are still to be
negotiated. Cost of goods, selling, general and administrative expense will
be under tight control as usual but we expect the R&D costs to increase from
EUR 10.8 million to EUR 17 million primarily because of CB-03-01 and Methylene
Blue MMX®. We expect 2013 EBIT to increase by around 14%.
We await a continuous news flow: in the first half of 2013 we expect to be
able to announce the start of the phase III clinical trials for Methylene Blue
MMX®. At mid-year we will report the first time revenues for the Uceris™ and in
the second half we expect to be able to report on first sales of Cortiment™ and
the completion of the phase III clinical trial for Rifamycin SV MMX® for Travellers’ Diarrhoea. We believe that each and every one of the products above has the
potential to increase our EBIT substantially going forward. If things develop
the way we project, then distributing some if not all of the proceeds to the shareholders as of 2014 will become a real option.
We are grateful to our shareholders and partners, who have maintained
their confidence in our Company, and to our employees, whose hard work and
commitment have once more made our significant achievements possible.
Lainate, 27 March 2013
Mauro S. Ajani
Chairman of the Board &
“The FDA approval of Uceris™
provides an important new
therapeutic option to patients and physicians for the
treatment of active, mild to
moderate Ulcerative Colitis.”
Prof. William Sandborn, MD
University of California San Diego
Strategy
Cosmo’s principal objective is to achieve a superior long-term return on investment for its shareholders. To attain this, the Company applies an entrepreneurial approach in assessing opportunities and risks. This translates to a solid
understanding of strengths and weaknesses, a careful assessment of what can
be changed and what not, and a risk-averse financial approach: existing financial
resources need to be available for all projects before the Company decides to
proceed on them.
The cornerstones of Cosmo’s business strategy are:
Manufacturing excellence
Given its long historical background as a manufacturing entity of Parke Davis
and Warner Lambert, Cosmo has key technical skills in manufacturing and
an increasing knowledge of the colon. This has been the base for the drug
development program focusing on drugs that can be applied to the colon as
topical applications. It is a key strategy to further develop these skills and to
find additional patented and off-patent chemical entities whose effectiveness
or safety profile can be improved by applying these skills. Furthermore the
Company intends to position itself as a manufacturer of complex generics.
Cosmo’s principal objec-
Large, low-risk product portfolio
tive is to achieve a supe-
In order to diversify risk, it is Cosmo’s objective to have a broad portfolio of unique
rior risk-reward return
revenue-generating and income-earning products. As an entrepreneurial com-
on investment for its
pany, the focus has been on using a low-risk approach to expand. It is Cosmo’s
shareholders. To attain
objective to identify well-known molecules that it can improve with the MMX®
this, the Company
technology, manage the development process as far as possible and find suitable
adheres to one funda-
partners to take on the activities where the Company does not have the neces-
mental principle – to
sary skills. Given that the preclinical costs by and large fall away when redevel-
apply an entrepreneurial
oping or reindicating chemical entities, development costs are lower than
approach in assessing
costs of developing a new chemical entity. More importantly, development risks
opportunities and risks.
tend to be far lower given that the basic chemical entity is already in the market.
The Company then intends to license the products out and to earn between 20%
and 30% of net revenues in royalties and with the manufacturing of the products.
After an initial focus on Inflammatory Bowel Disease (IBD), which led to a
deep knowledge of the colon and provided a first stable income base, Management has sought to apply this knowledge to broader markets with greater
potential. Methylene Blue MMX®, which is a diagnostic for the identification
of polyps and precancerous colon lesion is directed at the colon cancer diagnostic market that is performed via endoscopy, a market which consists of
around 30 million colonoscopies in the seven major markets alone. Naloxone
MMX® on the other hand is directed at relieving chronic Opioid-Induced
12 Cosmo Pharmaceuticals Annual Report 2012 – Strategy
Constipation and is directed at all chronic opioid users, which are deemed to be
around 4 million persons in the seven major markets, and finally the skin market
which, in the case of Acne, affects more than 45 million persons in the US alone
and in the case of Alopecia affects around 12% of all men.
The decision to move into a new area, skin diseases that are treated topically,
and to do this by way of a new chemical entity, is a deviation of the abovementioned low-risk strategy but it is based on solid criteria. Cosmo Bioscience,
a sister company, had been working on new antiandrogen molecules which it
considered for its cancer vaccines. The Company then took over the molecules
that were applicable topically. First skin penetration tests were conducted by
Novartis (which subsequently closed its skin division), and Intrepid Therapeutics
assisted the Company in preparing the IND filing and in designing the clinical
trials and is helping supervise these.
Partnerships
Shire has been building the market for Lialda®/Mezavant® since 2007 and Santarus, Ferring and Dr. Falk Pharma are the licensees for Budesonide MMX® and
Rifamycin SV MMX® and Medicis/Valeant is the partner for the development of
CB-03-01.
Cosmo has entered into an agreement with Intrepid Therapeutics LLC, a
company set up by specialized dermatologists and skin company managers, to
assist the Company in its discussions with the FDA and in managing the clinical
trials in the US for CB-03-01. In the case of CB-17-01, (Methylene Blue MMX®),
the Company however feels that it has sufficient competences and experience
to develop the product through phase III.
Strategy – Cosmo Pharmaceuticals Annual Report 2012 13
Business performance against strategic objectives
Strategic priority
Metrics
Performance
Comments
Approval of second product
FDA approval of Uceris™
Approval obtained in USA
Slight delays versus time
Cortiment™
Holland on 31 January 2013
Find partner for development of CB-03-01
Progress clinical pipeline
and MEB approval of
Agreements signed
on 14 January 2013 and in
Agreement signed with
Intrepid as advisor and
plan
Goal attained
Medicis/Valeant as licensee
Methylene Blue MMX®
Key data on polyp and
Goal attained, EMA ap-
for filing of phase III in USA
and location generated SPA
FDA approval pending
phase II to generate data
and EU
Completion of Rifamycin
SV MMX® phase III trial
adenoma detection, size
US phase III trial completed
Delay in EU trial due to de-
tained, EU phase III trial
patients and Indian author-
and clinical end point atstill ongoing
IND filing and progress
CB-03-01 in phase II
proved phase III design,
IND for Acne filed, phase II
started
cision to recruit additional
ities delaying authorization
for trial extension
Goal attained, slight delay
over original time schedule
recompletion of phase II
Acne
Replenishment of pipeline
Adequate cash and liquid
investment reserve
Projects in phase I
Complete formulation and
Delay due to focus on other
Projects in preclinical
Completed characterization
Characterization completed
Adequate level of cash plus
Net cash of EUR 27.3 mil-
Cash and liquid investment
vestment reserve amounts
finance entire development
liquid investment reserve
phase I of CB-01-16
of CB-01-17 (prostaglandine)
lion of cash. EUR liquid into EUR 66.1 million
manufacturing capacity
reserve are sufficient to
of pipeline
Net cash generated in
EUR 23.0 million
Increase by 103.7%
Manufacturing revenue by
Total manufacturing re-
Goal attained
operations
Improve utilization of
projects
capital investments
venue increased by EUR
3.5 million to EUR 25.2
million while capital
investments were made for
EUR 2.1 million
Quality partners
Increase of revenue of
licensed product
Shire has increased rev-
Analysts expect Shire to
from USD 372 million
in 2013 to USD 422 million
enues of Lialda®
to USD 400 million
Partners attain critical
goals
Santarus has obtained
approval for Uceris™ in the
USA
increase Lialda® revenues
Santarus launched Uceris™
on 13 February 2013
Approval of Budesonide MMX® in the US as Uceris™
and in the EU as Cortiment™
Our licensee Santarus filed the NDA on 19 December 2011 under the brandname of Uceris™. On 14 August 2012 the FDA announced that it needed additional time to review the filed documents and moved the PDUFA date out to
16 January 2013. On 14 January 2013 approval was then announced and the
product was launched in the market on 13 February 2013.
In May 2011 the Company filed the MAA (Marketing Authorization
Approval) for Budesonide MMX® in 15 EU countries with the Dutch Regulatory
Authority acting as reference member state. Ferring, the worldwide licensee
(except of the US and Japan) has announced that upon approval, the product
would be marketed under the Cortiment™ brand name. On 9 August 2012 the
MEB announced that they declined approving Cortiment™ on the basis of lacking clinical relevance. The Company filed a note of objection which was heard
on 6 November 2012 and the MEB then on 31 January 2013 decided to grant the
marketing authorization to Cortiment™ in The Netherlands. The process of getting the approval in other EU countries is currently ongoing.
Finding partners for CB-03-01
In order to bring on board additional expertise the Company hired Intrepid
Therapeutics as advisors and successfully filed the IND in February 2012. During
2011 the Company had set up an electronic data room and invited various large
multinational companies dedicated to skin diseases to assess the CB-03-01
opportunity. On 2 April 2012 we then informed that the Company had granted a
worldwide license to Medicis for all applications of CB-03-01. With these two
agreements the Company achieved two key strategic objectives: Intrepid will
assist in managing the phase II clinical trials competently, and in Medicis,
which was subsequently taken over by Valeant, we have found a partner that is
one of the world’s premier companies in skin diseases and fulfills all the
requirements for successfully managing the subsequent phase III and, once
approved, worldwide marketing of CB-03-01.
CB-17-01 Methylene Blue MMX®
On 22 October, 2012 the Company announced that the phase II clinical trials on
patients undergoing routine colonoscopy for colon cancer detection had been
concluded successfully. The data had demonstrated polyp and adenoma detection rates that were substantially higher than those historically seen with
other procedures and the trials generated substantial information necessary
for a successful filing for a phase III with the US and EU authorities.
Strategy – Cosmo Pharmaceuticals Annual Report 2012 15
“I was always looking for an
alternative to the somewhat
messy chromoendoscopy.
The results we had in the
phase II were so convincing
that I could end up doing
all my endoscopies with
the Methylene Blue MMX®
tablets.”
Alessandro Repici, MD
IRCCS Istituto Clinico Humanitas,
Rozzano, Milan, Italy
Rifamycin SV MMX® phase III clinical trials for Travellers’ Diarrhoea
Both the EU and the US trials are managed by Cosmo’s licensees. Santarus completed its US phase III pivotal trial and on 12 September 2012 announced that
the primary clinical end point “time to last unformed stool (TLUS)” had been
met with statistical significance versus placebo. Dr. Falk Pharma, the EU licensee, however, incurred additional delays in its trials for noninferiority of Rifamycin SV MMX® to Cypro. The size of the trial was then increased to about 1,000
persons and this required renewed authorizations in India. During the refil-ing process the Indian government then announced that they were making a
general audit on all clinical trial approval processes in India and were delaying
all pending approvals until the audit has been completed. This delay also
affects Dr. Falk Pharma’s trial which is now scheduled to be completed in late
2013. Santarus needs to file the data from two pivotal trials so they cannot file
the NDA until they have the data set from Dr. Falk Pharma.
LMW Heparin MMX®
During 2012 we initiated a market search to find partners in developing LMW
Heparin MMX®. Given the impending success of the Uceris™/Cortiment™
approvals, these efforts were not pursued because both drugs could be
positioned in very similar areas. LMW Heparin will be reassessed in 2013.
CB-01-16 Naloxone MMX®
The next steps in the development are scheduled to take place in 2013.
Replenishment of pipeline
The Company has developed substantial competence in understanding how
drugs work in the colon. This is allowing it to develop new safer or more effective
and patentable, yet lower risk applications of existing chemical or biological
The Company will start
entities. Selective companies have approached us with inquiries of using the
assessing new chemi-
MMX® technology to deliver their new molecule to the colon. In late 2012 we
cal entities as possible
entered into an agreement with the Dutch antibody company AIMM. The Com-
MMX® projects.
pany will take a small stake in the equity of the company and focus on developing the oral uses of the antibodies AIMM discovers.
Information on investors’ and R&D days
We had an R&D investors’ day on 25 January 2013 and the next one is planned in
Milan in Q1 2014.
Market overview
Inflammatory Bowel Disease (IBD)
Inflammatory Bowel Disease (IBD) is a chronic inflammatory condition that
affects the gastrointestinal tract causing a number of distressing symptoms
such as bleeding, diarrhoea, abdominal pain, weight loss. The disease has two
forms, Ulcerative Colitis and Crohn’s Disease, and both can significantly
impact the quality of life of an individual. The goal of treatment of IBD is to
induce and maintain remission of symptoms and mucosal inflammation in
order to provide an improved quality of life. There are a number of treatment
options available that range from nonpharmacological treatments, such as
dietary, to pharmacological treatments and surgery. No precise cause of the disease has been found but scientists and gastroenterologists commonly believe
that IBD results from a combination of genetic and environmental factors.
Persons affected
Aside from Japan, the rest of the world is currently considered to be statistically
insignificant in what pertains to disease prevalence, disease incidence and
market size. Cosmo believes that this view of the emerging markets is outdated.
Universally, gastroenterologists have been raising the awareness of IBD since
According to Datamoni-
they strongly believe that environmental factors play an increasingly important
tor, in 2011, the total
role in IBD. Thus, as the “Western way of life” spreads around the world it is
prevalence of Ulcerative
expected that the global population of people with Ulcerative Colitis and Crohn’s
Colitis was estimated to
Disease will steadily increase. Research has shown that over time it is likely
be approximately of
that the developing economies will have heavily increasing patient populations
1.7 million cases with
who will need to be adequately treated. (Datamonitor: Stakeholder Insight.
1.02 million cases in the
Inflammatory Bowel Disease. Page 73–75. 12/2007; BMJ Journals: Incidence and
US and 517,300 cases in
Prevalence of UC in Punjab, North India. Authors: Dr A. Stood, V. Midha,
the five largest EU mar-
N. Sood, A. S. Bhatia and G. Avasthi-Gut 2003;52:1587–1599.)
kets (France, Germany,
Italy, Spain and the UK)
Characterization of disease
while the prevalence of
Ulcerative Colitis is characterized by a diffuse mucosal inflammation, which is
Crohn’s Disease was esti-
limited to the colon. The disease originates in the rectum-sigma and spreads to
mated at 912,800 cases in
affect various segments of the colon up to the entire colon. 92% of the patients
the seven major markets.
have the disease in the rectum, predominately treated with uncomfortable ene-
Datamonitor expects the
mas or suppositories.
diagnosed UC population
Crohn’s Disease is a patchy, transmural inflammation that can affect any
to increase by 46% to
part of the gastrointestinal tract from the mouth to the anus. It is thus much
2.4 million in the seven
more disparately distributed than Ulcerative Colitis. The symptoms of Crohn’s
major markets by 2021.
Disease and Ulcerative Colitis vary from patient to patient depending on the
level of disease severity and may change over time because of the chronic,
relapsing nature of the diseases; most patients experience periods of disease
Market overview – Cosmo Pharmaceuticals Annual Report 2012 19
activity and remission. As IBD is a chronic disease, most patients are required
to take medication over the course of a lifetime making consistent compliance
with drug regimens an important factor.
In terms of severity, gastroenterologists tend to split the patient population
into three different categories (mild, moderate and severe) and prescribe medication accordingly. It is commonly believed that 45–55% of the patients have a
mild form of the disease, 30–35% a moderate form. Around 30% of patients that
have mild to moderate UC will be in the acute phase, 70% in remission.
Disease treatment
Given the chronic nature of the disease and the desire to minimize side effects,
the classic treatment strategy has been for the gastroenterologist to start
treatment using the mildest form of medication. If a pharmaceutical product
then proves to be ineffective, a step up to a more effective but usually more
toxic product is made. More recently, there has been a move by some gastroenterologists towards adopting a top-down approach meaning that the use of
aggressive therapies such as anti-TNFα therapies is started early on. This,
however, makes the therapy considerably more expensive per patient and
Cosmo believes that
more than 30% of all IBD
could expose the patient to higher, unnecessary adverse side effects.
According to Medtrack (March 2013) there are currently 265 candidates for
patients could be better
treatment of IBD under development. 34 candidates are listed as in phase III or
treated if they received
pending approval. In 2012 there was, however, only one approval for the treat-
anti-infectives concur-
ment of Ulcerative Colitis, Humira®. The bulk of the development continues
rently with their IBD
being in the biologics which are targeted at moderate to severe Ulcerative Coli-
medication because bac-
tis and besides Uceris™, all drugs scheduled for market entry in the US in 2013
terial overlay hinders
and 2014 are biologics. Further a number of biosimilars are expected to enter
topical approaches to the
the market as of 2014. All drugs under development are targeted at treating the
inflamed mucosa.
symptoms. To our knowledge no drug is under development which is attempting to eliminate the chronic disease.
Cosmo believes that there is growing consensus in the medical community
that infections play an important role in onset and maintenance of IBD. The
Company believes that more than 30% of all IBD patients could be better treated
if they received anti-infectives concurrently with their IBD medication. Given
that IBD is a chronic disease, it is a considerable challenge for the pharmaceutical industry to develop anti-infectives that can be applied frequently without
incurring problems associated with resistance.
Treatment with 5-ASAs for the mild to moderate form of the disease includes
oral dosage forms (primarily tablets), enemas and suppositories. Corticosteroids are delivered in tablets and enemas; and treatment with immunosuppressants is primarily with tablets with selective injected applications. Biologics
have, to date, all required intravenous or subcutaneous injections. This means
20 Cosmo Pharmaceuticals Annual Report 2012 – Market overview
that the active pharmaceutical ingredient acts in different forms. Tablets,
enemas and suppositories develop their effect primarily topically but they have
the disadvantage that they do not consistently reach the site of inflammation,
while injections only act systemically and thus also reach many parts of the
body that do not require treatment.
Severe 1
Surgery
ics
iot
An
tib
Corticosteroids
LMW Heparin MMX®
cs
Uceris™
Cortiment™
i
og
ol
Bi
Immuno-
suppressants
Rifamycin SV MMX®
Zacol NMX®
From a pure market
value perspective, the
value of the IBD market
1
Mild 1
Aminosalicylates
(5-ASA)
Lialda®/Mezavant®/Mesavancol®
Diet (and probiotics)
Status of disease severity
in the seven major
markets (US, Japan, UK,
Germany, France, Italy,
Spain) reached USD 7.9
billion in 2012.
According to Datamonitor (05.10.2012) the value of the IBD market in the
seven major markets (US, Japan, UK, Germany, France, Italy, Spain) reached
USD 7.9 billion in 2012. Datamonitor forecasts the seven major IBD markets
will further grow to USD 8.7 billion in 2021. IBD sales grew steeply in the seven
major markets which Datamonitor attributes to a combination of uptake of
drugs, such as Abbott’s Humira (adalimumab), price increases and the earlier
treatment of patients with expensive biologics, particularly in those who have
Fistulizing Disease and bad prognostic features of disease.
The US IBD market is the largest of the seven major markets in terms of
both sales and volume. In 2012, the US generated 75.6% of the sales in the combined seven major markets again increasing its market share. In its forecast,
Datamonitor expects the US will remain the largest IBD market in terms of
sales and volume over the next decade. After the specific antirheumatic agents,
immunosuppressive agents had the next highest growth in sales. The intestinal anti-inflammatory drug class, which consists of the 5 aminosalicylates
and several corticosteroids such as budesonide and hydrocortisone, dominates
the seven major markets in terms of volume, and accounted for revenues of
USD 1.7 billion or 21.8% of the sales in 2012. Datamonitor projects this drug class
to decline by approximately 4% p.a. due to shift to biosimilars which are scheduled to enter the market in the US as of 2014.
Competitive landscape
Asacol® continues being the most sold 5-ASA, but it has been losing market
share to Lialda®, which increased revenues by 7.5%. No new molecule was
approved for marketing in the US for mild to moderate Ulcerative Colitis in 2012.
There were no substantial changes in the corporate competitive landscape
of companies focusing on the IBD market in 2012.
Colon cancer diagnosis
More people get affected by lung cancer, prostate cancer and breast cancer but
colon cancer has the highest death rate because less than 10% of all colon cancers
are detected in stage I. Thus practically all national health departments have
put a heavy emphasis on early detection of colon cancer. According to the American Institute of Gastroenterologists, colon cancer develops from polyps which
are abnormal growths in the colon. Were these polyps detected early and excised,
In 2012 around 350,000
then more than 75% of all colon cancers could be avoided. This would not only
new colon cancer cases
avoid suffering by persons affected but produce multi-billion cost savings for
will be reported in the
national health systems. In the USA the average cost to treat a Medicare
countries comprising the
patient with colorectal cancer is USD 140,000 and it rises to USD 310,000 if it is
seven major markets (US,
late-stage cancer. This cost is substantially higher if the cost of lost labor is
UK, Germany, France,
added.
Spain, Italy and Japan).
According to the American College of Gastroenterologists the most effective
In 2012 there were also
tool to diagnose colon cancer is colonoscopy. The goal of colonoscopy is to explore
around 210,000 deaths
the entire organ (which is why it is better than sigmoidoscopy) for polyps and to
from colon cancer in the
remove these to interrupt the adenoma carcinoma sequence. Small-polyp detec-
seven major markets.
tion is dependent on the experience and attention span of the gastroenterologist
Diagnosis is either
performing the colonoscopy. On average about ⅓ of all polyps that are smaller
through fecal occult
than 10 mm go undetected. Developing devices that improve polyp detection
blood tests (FOBT), sig-
rate is thus crucial. The American Society of Gastroenterologists assessed
moidoscopy, colonos-
devices to improve the colon detection rate and found that wide angle colonos-
copy, virtual colonoscopy
copy and electronic chromoendoscopy do not appear to improve polyp and
or double contrast bar-
adenoma detection and pronounced that pan-colonic or targeted methylene
ium enema. No numbers
blue or indigo carmine staining with or without magnification or high-reso-
are available about the
lution endoscopy is the most widely used chromoendoscopy technique for the
size of these markets.
detection or differentiation of colon polyps and neoplasms. Consequently
various National Health Agencies and Gastroenterologic Societies recommend
the use of chromoendoscopy for the improved detection of polyps and neoplasms. In this technique a spray-catheter is inserted into the colon along the
endoscope and the gastroenterologist manually sprays methylene blue at
suspicious areas that need highlighting. Methylene Blue is not absorbed by
dense cancerous tissue thus its application will help identify and demarcate
polyps and adenomas. Yet this recommendation has not received wide practical support by gastroenterologists that conduct colonoscopies (in the most
advanced hospitals chromoendoscopy is applied in around 10–15% of all cases)
because it is a time-consuming, messy technique that requires preparation
and additional work during the procedure.
Market size
National Health Institutes recommend that all persons over 50 have a colonoscopy every 5 years. This would mean that around 56 million colonoscopies would
take place every year in the seven major markets. Analysts, however, project
that there were around 30 million colonoscopies in the seven major markets in
2012.
Competitive landscape
Exact Sciences is developing a molecular diagnostic colorectal cancer screening
Acne is the skin disease
test based on stool analysis. Currently endoscope manufacturing companies
with the highest preva-
are investing heavily in new endoscopes which improve visibility including new
lence of all skin diseases.
light sources such as blue light. One company, Salix Pharmaceuticals, is devel-
Currently there are no
oping a tablet which intends to deliver Lumacan/hexaminolevuminate to the
topical antiandrogen
colon where this should help visualize polyps and adenomas.
products in the market.
Acne
Acne is a dermatological disorder that is characterized by the formation of
lesions such as comedones, pustules, and cysts on the face and less commonly
on the back and chest of the sufferer. Acne is caused by the obstruction and
inflammation of hair follicles and their accompanying sebaceous gland, typically
by sebaceous oils and keratinocytes. The obstructed hair follicle and gland may
then be infected by bacteria that inhabit the surface of the skin. Lactase enzymes
possessed by bacteria metabolize lipids, generating by-products that may irritate the wall of the follicle causing further inflammation. The importance of
androgens, both in males and in females, in influencing the onset and the evolution of Acne is well accepted by the dermatologists.
Diagnosis and treatment
Acne is typically diagnosed by visual examination, and categorized according
to the severity of the condition by a number of scales that categorize the number
and type of lesions that appear on the skin. Although there are many tools
through which to establish the severity of a sufferer’s condition, typically,
mild Acne sufferers can be categorized as having less than 30 lesions present on
their skin, moderate sufferers as featuring between 30 and 125 lesions on their
body, and severe as having more than 125 lesions on their skin.
There are four commonly used classes of therapeutics that can provide
relief from Acne, with each featuring a differentiated mechanism of action:
_ Topical antibiotics and antiseptics;
_ Treatments that interfere with the pattern of keratinization;
_ Anti-inflammation treatments;
_ Therapies that act to inhibit the androgen response.
Market
Acne affects about 45 million people in the US, i.e. 85% of all teenagers respectively around 16% of the population. The worldwide market for Acne is valued at
over USD 2.8 billion.
Other relevant skin diseases
Alopecia (androgen-induced hair loss in males) affects about 12% of all men
over 20 years of age. Propecia™, an oral drug that acts by inhibiting 5-alpha
reductase, generated sales of USD 424 million in 2012.
Hirsutism (androgen-induced growth of facial and/or body hair in women)
affects about 10% of the female population. The worldwide market remains
largely undeveloped.
Competitive environment
The skin market is intensely competitive. More than 380 companies have Acne
products in the market. But there are only 21 projects in phase II and only 5 in
phase III. In Alopecia, there are currently 4 products in phase II and 2 in phase III.
Research and development
Cosmo’s pipeline
Phase
Product
Drug type
Lialda®/ Mezavant®/ Mesavancol®
5-ASA
Zacol NMX®
Intestinal Disorders (nutraceutical)
Dietary supplement
Budesonide MMX®
Corticosteroid
Rifamycin SV MMX®
Travellers’ Diarrhoea
Antibiotic
I
II
III
Italy, Eastern Europe Dr. Falk
Santarus: US
Ferring: Worldwide
(excluding Japan
EU Q4 2013 and US)
US Feb 2013
US
EU 1/13
market share of 22.5% of
all 5-ASAs in the US and
Dr. Falk Pharma:
Europe (excluding
Italy) andAustralia
Santarus: US
H2/13
H1/14
cancer prevention in UC patients
had achieved an overall
Launch partner
US, EU Giuliani/Shire
CB-17-01
Diagnostic
cancer prevention in surveillance
patients
At year end 2012, Lialda®
MA
CB-03-01 (NCE)
Acne
Steroid ester,
androgen antagonist
CB-03-01 (NCE)
Alopecia
Steroid ester,
androgen antagonist
LMW Heparin MMX®
• Induction of remission in UC
Biologic
H1/14
POC H1/15
Licensed out
worldwide
Medicis/Valeant
Licensed out
worldwide
Medicis/Valeant
• Maintenance treatment for UC
CB-01-16
Opioid-Induced Constipation
before 2012
2012
Opioids antagonist
H2/13
current and prospective
a market share of 6–11%
in the EU.
Marketed products
Lialda®/Mezavant®/Mesavancol®
Lialda® (as the product is called in the US) / Mezavant® (Europe) / Mesavancol®
(Italy) is the first proprietary product Cosmo developed, a mesalamine MMX®.
It is the entry-level product for all persons suffering from mild to moderate
Ulcerative Colitis. It was introduced in the US market by Shire, which has the
worldwide license (excluding Italy and other selected rest-of-the-world markets
that are licensed to Giuliani), in March 2007 for the treatment of acute mild to
moderate Ulcerative Colitis. In 2011 Shire also got approval for the use of Lialda®
in the treatment of maintenance of remission, i.e. as a treatment between the
acute attacks. Lialda® principal advantage is that a patient requiring 4.8 g of
mesalamine to treat the inflammation can take the required amount of tablets
at once instead of having to take tablets three to four times a day. This is due to
the fact that the MMX® technology assures a high concentration inside the colon
and little absorption into the main blood system. At year end 2012, Lialda® had
Research and development – Cosmo Pharmaceuticals Annual Report 2012 25
“The MMX technology enables us to prescribe a drug
that is known to be effective
without incurring any of its
known side effects.”
Prof. Simon Travis, MD
John Radcliffe Hospital, Oxford, UK.
26 Cosmo Pharmaceuticals Annual Report 2012 – Research and development
achieved an overall market share of 22.5% of all 5-ASAs in the US. In the EU, the
marketing effort for Mezavant® has made progress and market shares
improved to 5–13% depending on country.
The table below shows the development of the Lialda®, Mezavant® and
Mesavancol® tablets sold to Shire and Giuliani.
2012
No. of
EUR 1,000
tablets
Lialda®
2011
No. of
EUR 1,000
tablets
149,190,294
9,957
94,180,146
6,204
Mezavant®
27,594,900
2,872
32,714,520
3,360
Mesavancol®
29,753,615
1,752
21,315,277
1,224
206,538,809
14,581
148,209,943
10,788
Total
During 2012 we delivered in total 206.53 million tablets, an increase of
39.4% over 2011.
Zacol NMX®
Zacol NMX® is a nutraceutical product that uses an amended form of the MMX®
technology in order to deliver butyric acid and inulin directly to the colon.
Butyric acid accounts for powerful metabolic activities, which are the basic
support for the integrity and reconstitution of the gut mucosa; and inulin promotes the growth of the saprophytic flora, which in turn produces additional
short-chain fatty acids (SCFAs), thus reinforcing colonic defences against
infections. To date, there has not been any product that was able to successfully deliver butyric acid to the colon. Zacol NMX®, together with an appropriate diet, could represent the first step for the treatment of colon disorders.
Market penetration in Italy continues being low. In 2010, the Company
signed new distribution agreements in Russia, Ukraine, Belarus, Moldova,
Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, Tajikistan, Azerbaijan,
Armenia and Georgia, and first deliveries occurred in early 2011.
Budesonide MMX®, Uceris™, Cortiment™
Budesonide MMX®, our second MMX® product, is called Uceris™ in the USA and
was approved for marketing in the USA on 14 January 2013 with the first sale
occurring on 13 February 2013. In Europe the product is called Cortiment™ and
it received the marketing approval in Holland on 31 January 2013. Currently steps
are under way to expand the approval to other European countries.
Corticosteroids are known to be more effective than 5-ASAs in the treatment
of IBD but they are also known to have severe side effects. As a result, no corticosteroid had received approval for use by mild to moderate Ulcerative Colitis
patients in the US. By applying the MMX® technology to budesonide, an off-
patent corticosteroid, the Company developed a treatment that is more effective
than existing 5-ASA applications and less toxic than classical corticosteroid
applications. Santarus, our US licensee, is marketing it as a safe corticosteroid
and is initially targeting those mild to moderate patients that do not get adequate treatment with 5-ASAs.
Products in clinical development
Rifamycin SV MMX®
Rifamycin SV MMX® is a broad-spectrum, semisynthetic, orally poorly absorb-able antibiotic which could be used for the treatment of bacterial infections of
the colon. The application of MMX® technology to Rifamycin SV allows the antibiotic to be delivered directly into the colon, avoiding unwanted effects on the
beneficial bacterial flora living in the upper portions of the gastrointestinal
tract. The specific dissolution profile of Rifamycin SV MMX® tablets is thought to
increase the colonic disposition of the antibiotic so that an optimized intestinal
concentration is achieved thus abating its systemic absorption in the small
intestine. In the US it is considered a new chemical entity because there is no
The approval of Uceris™
and Cortiment™ is a testimony to the versatility
of the MMX® technology
in being able to deliver
active pharmaceutical
principle to the colon. It
also is a breakthrough
for the Company because
it means that income
streams will henceforth
be more diversified.
FDA-approved application of Rifamycin SV. In the EU, however, it has been in
the market for some time.
Rifamycin SV MMX® successfully completed phase III clinical trials in Travellers’ Diarrhoea in America. The phase III clinical study with Rifamycin SV
MMX® enrolled 264 patients in an international multicenter, randomized,
double-blind, placebo-controlled trial to assess the efficacy and safety of Rifamycin SV MMX® 400 mg (two oral tablets of 200 mg each) taken twice daily
(800 mg total daily dose) for three days in the treatment of patients with Travellers’ Diarrhoea. It evaluated the safety and efficacy of Rifamycin SV MMX® and
met the primary end points of reducing time to last unformed stool (TLUS) and
achieving clinical cure (as defined in the study protocol) in the treatment of
patients with Travellers’ Diarrhoea. In the intent-to-treat (ITT) population
(n=264) the median TLUS was 46.0 hours for Rifamycin SV MMX® (n=199) compared with 68 hours for placebo (n=65), p=0.0008. The percentage of patients
that achieved clinical cure was 81.4% in the Rifamycin SV MMX® treated group
compared with 56.9% in the placebo group, p≤0.0001. Results in the per-protocol population (n=240) were similar to the ITT population. Rifamycin SV MMX®
was generally well tolerated in this phase III clinical study and the frequency of
treatment-emergent adverse effects was similar to placebo. The trial was conducted by Santarus who licensed rights to develop and commercialize Rifamycin SV MMX® in the US from the Company. Dr. Falk Pharma GmbH, Cosmo’s
European development partner, is conducting a second phase III clinical study
to evaluate the efficacy of Rifamycin SV MMX® versus ciprofloxacin on the
primary end point of TLUS in patients with Travellers’ Diarrhoea. This non-
inferiority study is expected to enroll approximately 1,000 patients and was
scheduled to be completed 2013 but is now incurring unexpected delays because
of new rules imposed in India which may well move completion of the trial into
2014. Santarus and Dr. Falk plan to share the clinical data from the two phase
III studies for inclusion in each company’s respective regulatory submissions.
The Company believes that this drug has substantial potential because of
its possible application to a whole range of colonic infections such as Travellers’
Diarrhoea, Infectious Colitis, Clostridium-Difficile- Associated Disease, as supportive treatment of Inflammatory Bowel Diseases and Hepatic Encephalopathy
and most importantly also for Diverticulitis. Approximately 60% of all persons
that are older than 60 have diverticulae. When diverticulae get inflamed and
infected, serious complications can occur. Currently no product is approved for
the treatment of Diverticulitis.
Methylene Blue MMX®
Methylene blue is a vital dye which stains the living cells. It has the characteristic that it is not absorbed by dysplastic/neoplastic cells and thus allowing
their detection and demarcation via endoscope. Approximately 40 years ago
Japanese gastroenterologists started spraying methylene blue via a spray-catheter that was attached to an endoscope on to areas in the colon where they felt
that there could be suspicious precancerous growths. Polyps become clearly
visible and their demarcation is very precise which allows the gastroenterologist to excise the polyp without removing too much adjoining tissue. This
makes methylene blue an ideal substance for colon cancer diagnosis. In spite of
recommendations by the various Gastroenterological Societies and National
Health Agencies, chromoendoscopy, which refers to the topical application of
dyes during colonoscopy, has not been able to achieve a real breakthrough in
the market because it is a time-consuming and messy procedure. This made
methylene blue an ideal candidate for an MMX® application.
Cosmo started developing Methylene Blue MMX® in 2010. In Q3 2011 a doseranging study was initiated to determine the optimal staining procedure. Over
100 patients were enrolled, two doses were tested and tablets were administered in varying time intervals. This study has been completed and convinced
the Company that a consistent colonic staining can be attained and that the
correct dosing and administration procedure had been determined. In 2012
studies CB-17-01/04 and CB-17-05 were undertaken. Study 05 (N=96) focused on
polyp and adenoma detection rate in surveillance patients after colonic mucosal
staining attained after a single dose of 200 mg tablets administered during and
at the end of the bowel pre intake. Polyps were detected in 63.5% of all patients,
adenomas were detected in 46.9% of all patients. This compares very favorably
with data released in an article in Clinical Endoscopy of 2012 where a large popu-
lation of 3,560 patients were assessed using white light and split bowel prep,
which is considered the most advanced current treatment form. Therein polyps
were found in 44–49% of patients and adenomas in 27–32% of all patients. Study
04 (N=53) focused on the intraepithelial neoplasia detection rate after single oral
dose of Methylene Blue MMX® modified release tablets administered to patients
with long-standing Ulcerative Colitis undergoing colonoscopy. It is well known
that long standing ulcerative colitis patients have a vastly increased risk of contracting colorectal cancer. Unfortunately gastroenterologists have great difficulty
detecting polyps, adenomas and early-stage cancer in the inflamed mucosa.
Current standard practice is thus to take random biopsies in the inflamed colon
parts. Study 04 aimed at determining whether the application of Methylene
Blue MMX® tablets would make the identification of polyps, adenomas and
early-stage cancer in inflamed areas easier. Study 05 (N=96) focused on the polyp
and adenoma detection rate in surveillance patients undergoing outpatient
colonoscopy.They were open-label, efficacy exploratory descriptive studies
CB-03-01 has a substan-
using Methylene Blue MMX® 25 mg modified release tablets. In both studies no
tially higher cell-binding
comparator was used.
power than either testosterone or DHT, and will
CB-03-01
block the androgen recep-
CB-03-01 is the first new chemical entity that Cosmo is developing. It is a novel
tor thus inhibiting tes-
steroidal antiandrogen drug, cortexolone 17α-proprionate (CB-03-01) 1% cream,
tosterone/DHT’s effects
targeted at Acne, Alopecia, Hirsutism and possibly Seborrhea. CB-03-01’s
on the cell.
mechanism of action is based on the competitive activity between CB-03-01 and
testosterone respectively dihydrotestosterone (DHT) for androgen receptors in
the skin. CB-03-01 has a substantially higher cell-binding power than either
testosterone or DHT, and will block the androgen receptor thus inhibiting testosterone/DHT’s effects on the cell. CB-03-01 is devoid of systemic antiandrogenic activity, and has a moderate anti-inflammatory effect. In preclinical
studies, CB-03-01 was shown to be rapidly metabolized by the skin to the parent compound cortexolone, which is a physiological steroid lacking antiandrogen activity and is safe. CB-03-01 has also been shown to have good penetration
through the skin, making it the first steroidal antiandrogen suitable for topical application.
In 2009, a phase II pilot study was carried out. It was designed as a threearm, randomized, double-blind, parallel-groups, controlled study versus placebo and versus Retin-A® 0.05% cream, in facial Acne Vulgaris. Treatment was
a single daily topical application. The treatment duration was eight weeks plus
two weeks of follow-up. 77 males, 18–45 years of age were randomized, 72
patients were evaluated: 72 (ITT population); 67 (PP population) with the evaluation parameters being the Total Lesion Count (TLC), Inflammatory Lesion
Count (ILC), Acne Severity Index (ASI) and Investigator’s Global Assessment
(IGA) as efficacy variables; all these parameters were assessed at baseline and
after 2, 4, 6 and 8 weeks of treatment. Local Irritancy Score (IS) was evaluated at
“Methylene blue definitely
enhances the visibility
of polyps and adenomas.
The methylene blue tablets
now make the whole process much more reliable and
user friendly.”
Prof. Dr Ralph Kiesslich
Johannes Gutenberg University
of Mainz, Medical Director Marien
krankenhaus Frankfurt, Germany
weeks 2, 4, 6 and 8. The data of the trial showed that CB-03-01 had rapid onset
of activity and was significantly superior to placebo, and clinically better to
Retin-A® in the treatment of facial Acne Vulgaris after eight weeks of drug
application.
Substantial work went into planning the filing of the IND for Acne with the
FDA in the US. Given that CB-03-01 is a new molecule, an antiandrogen and a
steroid and is to be topically applied, substantial preclinical work had to be
performed so that the FDA would approve the IND. 21 preclinical projects were
carried out and the IND was filed on 31 January 2012 and accepted 30 days later.
The clinical trial CB-03-01/22 is a phase II, multicenter, randomized, doubleblind, vehicle-controlled, dose-escalating study to evaluate the safety and efficacy of CB-03-01 cream applied once or twice daily for 12 weeks in subjects with
facial Acne Vulgaris. The first patient of the first cohort was treated in August
2012. In the 360-patient dose-escalating trial, we started with 0.1% cream (bid)
to 1% cream bid. In the first cohort there were no adverse events. Currently the
second cohort is ongoing (0.5% bid). It is planned to complete phase II in the
first half of 2014. In the Alopecia indication phase I work continues. We plan to
file the IND early 2014.
LMW Heparin MMX®
Heparin is a polysaccharidic drug that has been long and successfully applied
as an injectable anticoagulant and anti-blood-clotting agent, especially after
major surgery. In the 1990s it was observed that major surgery patients treated
with heparin also witnessed a strong improvement of symptoms of IBD. This
observation led Cosmo to formulate the hypothesis that a tabletized form of the
right heparin, brought to the colon and topically applied, could retain the antiinflammatory properties whilst avoiding any negative anticoagulation effects.
The Company’s Low-Molecular-Weight (LMW) Heparin applied in the MMX®
tablets is based on a low-molecular-weight heparin that has been approved as
antithrombotic agent in the EU under the brand name Fluxum (Alfa Wassermann).
The Company met the FDA to discuss its requirements for the launch of a
phase III trial in the US. The FDA indicated that Fluxum is not approved for use
in the US and that it thus required that the full range of analytical assessments
would be necessary before it would accept the filing of an IND.
At the same time, the Company’s research team continued to investigate
the mechanism of action of LMW Heparin MMX®. They found that its antiinflammatory activity is related to the inhibition of pro-inflammatory
cytokines (TNFα, IFNα, IL-2) with a wider activity profile than monoclonal antibodies. The low-molecular-weight heparin is also an endogenous substance,
meaning that the body neither produces resistance nor neutralizing antibodies
to it. This strongly differentiates LMW Heparin MMX® from other biologic
drugs currently on the market.
Following the approval of Budesonide MMX®, the Company will determine
in 2013 whether there is enough space in the competitive environment to warPractically all patients
that need heavy dosages
rant proceeding with the development of LMW Heparin MMX®.
of opioids as a pain treat-
CB-01-16
ment suffer from serious
The target is to prevent Opioid-Induced Constipation (OIC). Practically all
constipation because the
patients that need heavy dosages of opioids as a pain treatment suffer from
opioids inhibit the peri-
serious constipation because the opioids inhibit the peristaltic movements in
staltic movements in the
the colon. Cosmo has been experimenting with off-patent antiopioids with
colon.
the objective of using the MMX® technology to transport these to the colon where
they would selectively inhibit opioid attachment to the MU receptors thus
making the peristaltic movements possible again.
The OIC market is largely undeveloped. According to IMS Health, about 230
million prescriptions were written for opioids in 2007 in the US alone. This is
estimated to represent about 65–75% of the worldwide opioid market.
Due to the extremely high workload in conjunction with other programs,
work on the CB-01-16 program was delayed into 2013. Formulation and stability
work will now be reinitiated with a phase I trial planned to start in H2 2013.
“The unique characteristics
of the MMX technology assure that the antibiotic is not
released in the upper gastrointestinal tract where it
would unnecessarily destroy
bacteria, which are relevant
for the digestive process.”
Prof. Robert Steffen, MD
University of Texas Public Health,
Houston (TX).
Scientific Advisory Board
In order to support the development of Cosmo Pharmaceuticals by providing
advice on scientific and clinical development and product application, the
Company established a Scientific Advisory Board. The Scientific Advisory Board
comprises the following members:
Dr Silvio Danese, MD
Director of the Research and Therapy Center of the Intestinal Diseases at the
Istituto Clinico Humanitas, Rozzano, Milan, Italy.
Prof. Geert D’Haens, MD
Director of the Department of Gastroenterology, IBD, Disease Center of the
Academic Medical Center Amsterdam, Netherlands.
Prof. Brian Gordon Feagan, MD
Professor in the Department of Epidemiology and Biostatistics at the University of Western Ontario, London, Ontario, Canada, and professor at Robarts
Research Institute, London, Ontario, Canada.
Prof. Ralf Kiesslich, MD
Professor of Gastroenterology at Johannes Gutenberg University of Mainz,
Medical Director Marienkrankenhaus Frankfurt, Germany.
Dr. Alessandro Repici, MD
Director Digestive Endoscopy Department, IRCCS Istituto Clinico Humanitas,
Rozzano, Milan, Italy.
Prof. William Sandborn, MD
Professor and Chief, Division of Gastroenterology, and Director, IBD Center,
University of California San Diego, USA.
Prof. Prateek Sharma, MD
Associate Professor of Gastroenterology and Hepatology, University of Kansas
School of Medicine and VA Medical Center, Kansas City (MO), USA.
38 Cosmo Pharmaceuticals Annual Report 2012 – Scientific Advisory Board
Prof. Robert Steffen, MD
Professor Emeritus of the Universtiy of Zurich, Adjunct Professor University of
Texas Public Health, Houston (TX), USA.
Prof. Simon Travis, MD
Consultant Gastroenterologist Translational Gastroenterology Unit,
John Radcliffe Hospital, Oxford, UK.
Prof. Michael Wallace, MD
Professor of Medicine, Chair; Div. of Gastroenterology, Mayo Clinic Florida,
USA.
Scientific Advisory Board – Cosmo Pharmaceuticals Annual Report 2012 39
Risk management
The Board has approved a comprehensive Internal Control System (ICS) in order
to assure that the internal processes are adequate, the financial reporting is
reliable, the assets of the Company are protected and all laws and internal regulations are complied with. The following risk matrix was established:
Scientific risk
Market risk
Personnel
Development risk
Manufacturing risk
ow
-h
ow
Kn
Information
ts
ien
Cl
Equipment and systems
ts
uc
od
Pr
Liquidity and financial risk
Legal risk
The Board has approved a
comprehensive Internal
Control System (ICS) in
order to assure that the
Risks are classified as cash risks, where events have immediate cash costs by
internal processes are
either loss of revenue or unplanned expenditures, or as value risks, where
adequate, the financial
events cause the value of the Company to fall because future revenue will not
reporting is reliable, the
be coming or future costs will be higher.
assets of the Company
Risk parameters were defined as existential risks that, should they occur,
are protected and all laws could put the being of the Company in jeopardy, or as business plan risks that
and internal regulations
are complied with.
could impede the fulfillment of planned strategic objectives.
All risks are classified either as scientific risks, development risks, manufacturing risks, market risks, liquidity and financial risks or legal risks. The
monitoring of each of these risk groups is assigned to a separate person. For
each of these risks the threats are defined, probabilities assigned and negative
cash and value impacts calculated. These risks and the parameters respectively
assigned to them are regularly reassessed.
These risks are then classified into risks that can be managed by appropriate
in-house action or risks that cannot be managed by internal action. All the
risks that cannot be met by internal action are then split into risks that can be
insured and those that cannot be reasonably insured and must be borne as
business risks.
40 Cosmo Pharmaceuticals Annual Report 2012 – Risk management
Following the earthquake in Northern Italy, which caused extensive damages in the region of Emiglia Romagna, the Company had external engineers
reassess the structural stability of its manufacturing, storage and administrative facilities. The well-know insurance specialists Willis were commissioned
with a “Supply Chain Disruption Analysis” which demonstrated that the risks
in the Company are under tight control.
Financial risk management
The Company’s principal financial liabilities, which comprise bank loans,
financial leases and trade payables, are mainly created to raise financing for
its operations.
The Company’s financial assets, such as cash and cash equivalents, trade
receivables and other receivables, are generated by its operations and managed
by the Company’s Treasury.
The major risks arising from the Company’s financial instruments are the
investment portfolio risk, credit risk, liquidity risk and the market risk (primarily interest rate risk and foreign currency risk). The Company’s Audit Committee periodically reviews the policies for managing each of the above-mentioned risks.
More information on risks is provided in note 32 of the consolidated financial
statements.
Risk management – Cosmo Pharmaceuticals Annual Report 2012 41
Operating principles
and activities
Procurement
For the Company’s contract manufacturing activities active ingredients are
either supplied by the client or purchased in the market from external Italian
or international suppliers. All of the materials purchased are standard materials provided by a large number of sellers.
With reference to the Company’s proprietary products, all active ingredients
are from external suppliers. All active ingredients required are manufactured
by more than one supplier. Generally the Company negotiates with these suppliers in order to determine one preferred supplier at attractive prices and then
holds certain inventory to prevent supply bottlenecks.
Production
The Company has the ability to manufacture tablets, ointments, and liquids.
All of Cosmo’s own products are manufactured in house, amongst other, at the
new FDA-approved plant, which is adjacent to the plant originally set up by
Parke Davis. In order to monitor the production processes, the Company has its
own analytics departments. The Company does not manufacture unfinished
products. All products are either packaged in bulk or final form at the Company’s
Cosmo is committed to a
packaging line. It is the Company’s intention to manufacture all of its own
program of continual
products in house.
improvement in environmental, health and
Environmental protection
safety performance by
Cosmo is familiar with and aware of the importance of protecting the environ-
making it an integral
ment and conducts its operations in a manner designed to protect the local
part of all its operations.
environment. Cosmo continuously monitors compliance with applicable environmental, health and safety laws and regulations and the requirements of
its permits and licenses and maintain programs that ensure that it:
_ monitors the quality of the ambient air and the protection of the water
resources;
_ evaluates the site programs for the protection of the environment and the
health and safety of employees and neighbors;
_ manages the waste disposal in conformity with the local regulations;
_ designs, constructs, maintains and manages its plant and systems in
accordance with the best practices;
_ communicates with the local community on safety and environmental
matters in a timely and effective manner.
Cosmo is committed to a program of continual improvement in environmental,
health and safety performance by making it an integral part of all its operations.
As a pharmaceutical company, Cosmo is not directly obliged under REACH
(Registration, Evaluation, Authorization and Restriction of Chemical Substances),
42 Cosmo Pharmaceuticals Annual Report 2012 – Operating principles and activities
a new European Community regulation on chemicals and their safe use (EC
1907/2006), but constantly monitors its suppliers (i.e. labels and packaging
materials) to assess their compliance to that regulation.
Quality management
Cosmo’s aim is to guarantee the development and the manufacturing of drug
products of high quality and to satisfy the expectations of all our international
customers. The quality system implemented at Cosmo meets the requirements
and the expectations of the European and American health authorities (EMA
and FDA) for the manufacturing of drug products. Pharmacopoeias, pharmaceutical directives and guidelines (i.e. those issued by ICH) help to maintain
the quality system at a high standard level. The quality system is fully in compliance with the current Good Manufacturing Practice (GMP) and allows the
production of drug products of defined quality.
The quality system at Cosmo’s plant is also certified according to ISO 9000
standard. This certification, even if not required for the drug product manufacturing, shows the attention of the Company to the quality and in general to
the service offered to its customers.
The quality system at
Cosmo’s plant is also cer-
Job safety
tified according to ISO
Cosmo constantly monitors its procedures and processes to ensure that the health
9000 standard. This cer-
and safety of all personnel working on site is protected and risk from accidents
tification shows the
or incidents arising from site activities is minimized both on and off site.
attention of the Com-
From a job category perspective, employment at Cosmo can either be
pany to the quality and
grouped into office activities, research and analysis activities or manufacturing
in general to the service
activities. An initial medical test on hiring and an annual blood and urine test
offered to its customers.
are performed for all managers, employees and workers; and all males above
40 years are tested for PSA (Prostate Specific Antigen), too. For managers and
employees working with a PC, eye and eyesight tests are made every two years;
and workstations are protected with blinds and properly positioned when
exposed to natural light. With respect to research and analysis activities, strict
policies were established together with the Italian Ministry of Health specifically with reference to the handling of dangerous substances. With reference to
manufacturing activities primarily in the manufacturing, packaging and handling of pharmaceuticals, there are strict internal work flow processes
intended to insure that accidents are minimized. There is an insurance coverage paid by the Company for accidents occurring off site.
In 2012 there were 54 work days lost in the group of manufacturing activities
due to four incidents which each led to more than 10 working days being lost.
This is three times more than 2011 but it is still only 0.17% of all working days.
Operating principles and activities – Cosmo Pharmaceuticals Annual Report 2012 43
Performance management
Starting from 2008, a staff incentive plan is in place for Cosmo’s employees,
based on predetermined goals achieved in the period 1 January – 31 December of
each year (the performance period). The plan has been conceived to provide an
incentive program to achieve overall corporate objectives and to enhance shareholder value, to reward staff for the achievement of corporate goals, to encourage increased teamwork among all disciplines within the Group and to help
attract and retain key people.
For the purpose of the plan, the Company’s staff has been divided in three
macro-areas of activity:
_ Production & Logistics (Area 1);
_ Research & Development (Area 2);
_ General, Administration & Finance, IT, others (Area 3).
Corporate goals are mostly economic, they are mostly based on the figures of the
consolidated budget approved by the Board and can vary by macro-area of activity or be present in more than one macro-area, but with different incidence.
The award is budgeted at 6% of the employees’ annual fixed compensation and
is adjusted upon days of presence at work or if goals are only partially achieved.
The achievement of corporate goals is verified and approved by Cosmo’s Compensation Committee and communicated to the Company’s unions.
Information technology
Cosmo has the hardware and software that the Management considers as adequate
for running its business. For Cosmo’s Server/Storage infrastructure, based on HP
Hardware and Vmware virtualization software, a firewall cluster is used.
Servers consolidation through virtualization technology allows Cosmo to reduce
energy costs by 80%, power down servers without affecting applications or users,
green our data center while decreasing costs and improving service levels.
The security level guaranteed through the implementation of the firewall
cluster has allowed Cosmo to strengthen its infrastructure in the context of
Business Continuity.
Since 2011, a solution of the ERP “SAP” appropriately designed for pharmaceuticals companies has been in use as an accounting and production system
which is integrated with quality control software.
The hardware is generally owned. The Company has concluded maintenance
and service agreements which the Management believes are sufficient to keep
the Company’s hardware and software functional.
Below, the IT infrastructure at Cosmo is showed:
Network Management
Cosmo infrastructure assures
that no data get lost, through
strong backup strategies and
strict security policies.
Plant Management
E-mail Service
view in real time every system
to cut the spam messages;
Every e-mail received is filtered
EBI lets Cosmo Maintenance
old e-mails are archived in a
in Lainate facility and address
dedicated server.
any problem quickly.
IT Support
SYSAID, the Cosmo helpdesk
software, lets users open service requests and IT manage
and audit every aspect of the
support process.
Cosmo
A redundant fiber channel
internet connection allows
datacenter houses
Cosmo to have a safe and fast
services for
File Sharing
internet connection.
ERP
A set of access-controlled fold-
SAP, the world-known ERP
ers lets Cosmo users store and
software, manages every step
share their files in the smartest
way.
Internet
Pharmaceuticals
of our process (production,
Quality Control
Quality, Formula, ECM and
finance) in a more solid and
compliant way.
other Quality Management
software is hosted on dedicated
servers.
For the year 2013 Cosmo has planned the following activities for the
Information Technology System upgrade:
MDM
Wi-Fi Guest
Mobile device will be secured,
Wi-Fi access to internet will be
in order to limit the sensible-
monitored for guests, who will
data leak in case of theft or loss
Access Control
receive temporary credentials.
of the device.
to keep track of their behavior
and surfing activity.
A new system will monitor
when and by whom the facility
is entered in real time. People
will enter only in authorized
areas and will be easily evacuated in case of disaster.
Disaster Recovery
Every Cosmo system will be replicated in a safer place, ready to
start in case of incident.
Cosmo
Pharmaceuticals
datacenter
ERP SSO Authentication
SAP Access will be integrated
with Active Directory, the central repository of Cosmo users’
personal data.
EDMS
A GMP-compliant system will
manage Cosmo Quality docu-
mentation and SOPs, speeding
up the process and reducing
manual work significantly.
Board
A Business Intelligence system
will help to analyze data and
reports from the ERP.
The figure below shows the service availability by category of users in the year
2012. The range varies from the lowest 98.8% service availability at the Quality
Department to 99.9% at the Plant Management:
100.0 %
99.8 %
99.6 %
99.4 %
99.2 %
99.0 %
98.8 %
98.6 %
98.4 %
E-
m
l
ai
ice
rv
Se
P
ER
F
g
rin
ha
S
ile
et
rn
te
In
IT
t
or
pp
Su
k
or
tw
Ne
nt
a
Pl
a
M
t
en
em
g
na
l
tro
n
Co
ity
al
Qu
Patents and licenses
Cosmo has been pursuing a double-cover selective country patent strategy.
A global MMX® patent protecting the platform technology has been filed and
granted in practically all major countries, and deriving product patents have
been filed and received in most of the countries. In selective cases the Company
subsequently files process and use patents. In 2012 the Cosmo patent portfolio
was further strengthened worldwide by the issuance of the following patents:
Date
Event
Country
Reference product
Patent granted
Norway
29.08.2012
Patent filed
US CON *
Uceris™
14.09.2012
Patent filed
US CON *
Uceris™
29.08.2012
Patent filed
US CON *
Uceris™
23.10.2012
Patent granted
US
Uceris™
03.04.2012
Patent granted
Canada
Rifamycin
29.06.2012
Patent granted
Japan
Rifamycin
30.07.2012
Patent granted
US CON *
Rifamycin
22.08.2012
Patent filed
US CON *
Rifamycin
29.08.2012
Patent filed
US CON *
Rifamycin
14.09.2012
Patent filed
US CON *
Rifamycin
Patent granted
Japan
CB-03-04
Notice of allowance
Europe
Cristalline forms
Div patent granted
Europe
CB-01-05
12.10.2012
Patent filed
Europe
CB-17-01
12.10.2012
Patent filed
US
CB-17-01
Patent granted
US CIP
MMX® technology
13.02.2012
Budesonide
Rifamycin
Antiandrogen
10.08.2012
LMW Heparin MMX®
27.06.2012
Methylene blue
endoscopic diagnosis
TREM2
31.07.2012
*
Continuation
Corporate governance
Group structure and shareholders
The Company is a stock corporation, “Società per Azioni” (S.p.A.), organized
under the laws of Italy and listed on the SIX Swiss Exchange. The share capital
amounts to EUR 3,748.9 thousand represented by 14,995,743 shares each with
a nominal value of EUR 0.25.
The Group is organized according to a matrix organization principle. The
line organization consists of five legal entities: Cosmo Pharmaceuticals S.p.A.
and its 100% subsidiaries, Cosmo S.p.A., Cosmo Technologies Ltd., Ireland,
Cristoforo Colombo Real Estate S.r.l., and the 99.30% held Cosmo Research &
Development S.p.A. The Group’s entities have their own Boards of Directors and
internal management structure. The functional tasks of the Group have been
allocated to the different entities.
Cosmo Pharmaceuticals S.p.A. is responsible for overall management of
the Group’s administration, information technology, personnel, finance
and investors relations. Cosmo S.p.A. is responsible for production. Cosmo
Technologies Ltd. is responsible for clinical development and international
business development; Cristoforo Colombo Real Estate S.r.l. holds the real
estate, plant and office buildings, and Cosmo Research & Development S.p.A.
is a service company that executes research and development activities for the
Group.
Business development is responsible for the negotiation of contracts with
licensing, production and marketing partners, for the identification of thirdparty products whose efficiency could be improved by the MMX® technology,
for the identification of products that could fit the Group’s portfolio well and
for the identification of products that are about to lose their patent protection
and that could be produced in house.
Research & Development is responsible for the identification of new chemical and biological substances that could be purchased by the Group or that
could be refined by the application of the Group’s MMX® technology, for the
correct design and timely execution of all clinical trials, for the definition
of clinical end points of clinical trials, for the selection and the management
of clinical research organizations, and for the patent strategy definition and
its execution.
Production is responsible for the quality of production, for production
planning, for the identification of unused capacity and its optimal use, for the
marketing to contract drug manufacturing clients and for the marketing of
temporarily unused contract drug manufacturing capacity.
Administration is responsible for all personnel, infrastructure and systems,
and insurance and security.
50 Cosmo Pharmaceuticals Annual Report 2012 – Corporate governance
Finance and investor relations are centralized in the Company, which provides
financial services for subsidiaries. As of 31 December 2012, the Group’s structure
was the following:
Cosmo Group shareholding structure
Cosmo Holding S.p.A., Italy
and selective managers of the Company (as per shareholders’ agreement)
49.9%
Public market
dievini
32.1%
Heinrich Herz AG/
Logistable
10.3%
7.7%
Cosmo Pharmaceuticals S.p.A.,
Italy (Listing entity)
100%
Cosmo Technologies
Ltd., Ireland
100%
Cosmo S.p.A.,
Italy
99.30%
Cosmo Research &
Development S.p.A.,
Italy
100%
Cristoforo Colombo
Real Estate S.r.l.
Corporate governance – Cosmo Pharmaceuticals Annual Report 2012 51
Major shareholders
Cosmo Holding S.p.A. is an Italian company with its registered office in Milan,
Italy. It is controlled by Mauro S. Ajani, the Chairman and CEO of the Company.
Cosmo Holding and selective managers of the Company are part of a shareholders’ agreement and together control 49.93% of the shares of the Company.
The company dievini Hopp BioTech Holding GmbH & Co. KG, the investment company of Dietmar Hopp and his family, owns 10.26% of the shares.
Heinrich Herz AG and Logistable SA, a related company, own 7.74% of the
shares.
32.07%
49.93%
Cosmo Holding S.p.A. and selective managers of
the Company (as per shareholders’ agreement)
dievini Hopp BioTech Holding GmbH & Co. KG
Heinrich Herz AG and Logistable SA
7.74%
Other shareholders
10.26%
Capital structure
Share capital
As per 31 December 2012 the share capital is composed of 14,995,743 shares, each
with a nominal value of EUR 0.25. The share capital is fully paid up. The shares
are issued in book entry form according to Italian law. No share certificates have
been issued and share certificates will not be available for physical delivery.
Shares are centralized in the central security depository system managed by
Monte Titoli. For the purpose of the exercise of the relevant rights (such as the
voting right pursuant to section 2370 of the Italian civil code and the right to
receive payment of dividends), shareholders must rely on the procedures of
Monte Titoli, Banca Intesa S.p.A., or SIS and on the intermediaries or participants that have accounts with Monte Titoli, Banca Intesa S.p.A., or SIS. The
financial intermediary, Banca Intesa S.p.A., is in charge of liaising between
Monte Titoli and SIS. Shareholders are entitled to receive written confirmation
regarding the number of shares held through the intermediary or the depositary bank at which they have the account.
Stock option plan
The extraordinary shareholders’ meeting of 14 December 2006 authorized the
increase of the share capital by a maximum of nominal EUR 378,000 with the
issue of 1,513,200 new shares at the service of an employee stock ownership plan
(ESOP), to be implemented within the following five years. At the shareholders’
meeting the Board of Directors was formally authorized to execute such plan.
On 18 December 2007 the Board of Directors granted a total of 1,013,568 options,
vesting after three years and exercisable at a price of CHF 22 per share until
14 December 2011. At the Board meeting of 17 December 2010 the extension of the
exercise period of the plan to 15 April 2015 was approved based on an authorization granted by the general shareholders’ meeting.
Of the 1,013,568 options granted, as at 31 December 2012, 852,588 options
are outstanding (after 15,264 options forfeited and 145,716 options exercised and
settled through the assignment of treasury shares, as per Board’s resolution).
On 22 March 2012, the Board of Directors granted a total of 15,264 options
with a vesting period of three years and an exercise price of CHF 22 per share,
and expiring on 15 April 2015. Italian law does not foresee the creation of conditional capital for stock option plans. The share capital will thus not be increased
until such time when the option holders execute their options and only if the
Company does not have sufficient treasury shares.
Authorization to purchase own shares
At the shareholders’ meeting on 20 April 2009 the shareholders approved the
Board of Directors’ proposal to have a position of up to 1.3 million shares. At the
shareholders’ meeting on 21 April 2011 the shareholders extended this authorization to 31 December 2012 and increased the allowable position to 1,499,574 shares.
At the shareholders’ meeting of 2012 the shareholders increased the authorization to 20% of outstanding shares and extended it to 31 December 2013. At year
end 2012, the Company held 993,889 shares that were purchased at an average
price of EUR 16.56 respectively CHF 19.96 per share.
Transfer of shares and disclosure of principal shareholders
The transfer of shares is affected by corresponding entry in securities accounts,
which record the transfer of financial instruments opened with authorized
financial intermediaries and in accordance with the applicable law. Upon registration of the transfer and upon request of the shareholder, the financial
intermediaries shall inform the Company of the transfer of shares, and the
Company shall update the shareholders’ register (“Libro Soci”) in accordance
with Italian law. A shareholder may ask for his registration at any time.
The Company has been advised that, since it is an Italian company listed
in Switzerland, it and its shareholders may not have the protection of either
Italian or Swiss laws and regulations governing disclosure of significant
shareholdings.
However, each shareholder (as defined in the Articles of Association) who
directly, indirectly or beneficially has voting or investment power in the
Company is required by the Articles of Association to comply with the laws,
rules and regulations.
Board of Directors
At the Annual General Meeting held on 20 April 2012, the new Board of Directors was appointed for a three-year period, eligible to successive terms following Italian civil code rules. The Board of Directors consists of five non-executive
members and two executive Directors. The Management of the Group is in the
responsibility of the Board of Directors.
Name/current position
Mauro S. Ajani
Member
since
Relevant external positions
2006
Executive Director
2006
Board member and head of audit committee
Executive Director;
Chairman and CEO
Chris Tanner
Executive Director;
CFO
of DKSH AG (SIX: DKSH), Zurich
Board member of Private Equity Holding AG
(SIX: PEHN)
Board member (Beirat) of Joimax GmbH
Board member of Qvanteq AG
Gianluigi Bertolli
2006
Non-Executive Director
General secretary of Italian National
Association of Chartered Accountants
President of statutory auditors of a
number of major Italian and international
companies
Founder and senior partner of
Studio Bertolli e Associati
Friedrich von Bohlen und
Halbach
2006
Chairman of the board (Beirat) of
Apogenix GmbH and of CureVac GmbH
Chairman of the board of
Molecular Health AG
Member of the board of Sygnis Pharma AG
(Deutsche Börse: LIO), Curacyte AG,
febit Inc., and Wilex AG
Member of the board (Beirat) of Cytonet
GmbH & Co. KG, febit holding GmbH,
and Immatics biotechnology GmbH
Name/current position
Alessandro Della Chà
Member
since
2006
Dieter A. Enkelmann
Relevant external positions
Member of the board of Santarus Inc
(NASDAQ: SNTS), Senior partner at
Studio Legale Edoardo Ricci e Associati
2006
Chief Financial Officer and member of the
executive management board of Julius Baer
Group Ltd. (SIX: BAER.S)
Board member of iNNutriGEL AG
Member of the board, the audit committee
and head of the compensation committee
of GAM Holding Ltd. (SIX: GAM)
Maria Grazia Roncarolo
2012
Scientific Director of the San Raffaele
Scientific Institute in Milan, Italy, since
2008 and Professor in Pediatrics, School of
Medicine and Surgery, San Raffaele VitaSalute University, Milan, Italy
Mauro S. Ajani
Italian (born 1955), resident in Milan, Italy, founder and Board Member of Cosmo
Pharmaceuticals S.p.A. since 2006, main shareholder of Cosmo Holding S.p.A.
(and thus indirectly of Cosmo Pharmaceuticals S.p.A.).
From 1994 to 1996, he was the general manager of the Russian company
Italcenter and took part in a joint venture of Italian and Russian entrepreneurs
for the creation of a pharmaceutical product distribution company. He was a
consultant of Pharmhispania from 1991 to 1993, an Italian-Spanish joint venture
for the import/export and distribution of pharmaceutical products between
Spain and Italy. In the period from 1983 to 1993, he was the marketing manager
of Pharmajani S.r.l., a company engaged in the commercial distribution and
logistics of pharmaceutical products. From 1980 to 1983, he was Nielsen’s area
manager for over-the-counter products of the Serono OTC company, while in the
period from 1978 to 1980 he worked as a salesman for the Lepetit company and
for the Gazzoni company in the OTC sector.
In 2011, Cosmo Bioscience Inc., which is controlled by Cosmo Bioscience
S.p.A., whose major shareholder is Mauro S. Ajani and his family, carried out
analytical services and development activities for the Group on a cancer-diagnostic and on the immuno-modulatory and anti-inflammatory activities of one
of the molecules the Group is working on.
Chris Tanner
Swiss (born 1951), has been a Board Member of Cosmo Pharmaceuticals S.p.A.
since 2006. Since 2006 he has been Chief Financial Officer of Cosmo Pharmaceuticals S.p.A.
Chris Tanner has a diploma as an economist and a PhD in economics from
the University of St.Gallen. He joined UBS in 1977 and following a management
trainee program worked in various foreign assignments. In 1985, he became
a member of the global credit committee and from 1987 to 1992 was the head of
corporate banking in Asia, Australia and Africa as well as Southern Europe. In
1992 he became head of corporate finance and capital markets at UBS in Zurich.
In 1998, one year after UBS’s merger with SBC, he left to become a partner of
Dr Ernst Müller-Möhl, cofounded the “20 Minuten” group of newspapers and
founded A&A Active Investor, a listed investment company. Since 2002 he has
been a corporate finance adviser and participated in numerous fund raisings
amongst other for the private placement of Cosmo Holding S.p.A. He is on the
advisory board of Millennium Associates, a financial adviser to the financial
services industry as senior adviser.
He is a board member and head of the audit committee of DKSH AG
(SIX: DKSH), a market expansion company, a board member of Private Equity
Holding AG, (SIX:PEH) a private equity investment company, Joimax GmbH,
a medtech company, and Qvanteq AG, a medtech start-up company.
None of the companies that Chris Tanner is a major shareholder of has any
business activities with the Company.
Gianluigi Bertolli
Italian (born 1951), Gianluigi Bertolli has been a Board Member of Cosmo Pharmaceuticals S.p.A. since 2006.
Gianluigi Bertolli is the founder and senior partner of Studio Bertolli e
Associati, a firm that specializes in M&A, accounting and tax advice. He is the
general secretary of the Italian National Association of Chartered Accountants
and president of statutory auditors of a number of major Italian and international companies.
Gianluigi Bertolli has a diploma as business and tax consultant, a diploma
as chartered accountant and a PhD from the Bocconi University in Milan, Italy.
Gianluigi Bertolli, and respectively the companies he owns, carry out a
series of tax and accounting services for the Company.
Friedrich von Bohlen und Halbach
German (born 1962), has been a Board Member of Cosmo Pharmaceuticals S.p.A.
since 2006 elected on the list proposed by the investors.
Friedrich von Bohlen is managing partner at dievini Hopp BioTech Holding
GmbH & Co. KG., the Company managing the life science activities and investments of Dietmar Hopp.
He is a member of the following boards: chairman of the board (Beirat) of
Apogenix GmbH, Heidelberg, member of the board of Cosmo Bioscience S.p.A.,
Lainate, Milan, member of the board of Curacyte AG, Munich, chairman of
the Board (Beirat) of CureVac GmbH, Tübingen, member of the board (Beirat)
of Cytonet GmbH & Co. KG, Weinheim, member of the board (Beirat) of febit
Holding GmbH, Heidelberg, member of the board of febit Inc., Massachusetts
USA, Chairman of the board of Heidelberg Pharma AG, Heidelberg, member
of the board (Beirat) of Immatics GmbH, Tübingen, chairman of the board of
Molecular Health AG, Basel, chairman of the board of Sygnis Pharma AG,
Heidelberg, and member of the board of Wilex AG, Munich.
Friedrich von Bohlen has more than 10 years of entrepreneurial experience
in the Life Sciences. As former CEO of Lion Bioscience AG he led Lion’s IPO in
2000 at “Neuer Markt,” Frankfurt, and at NASDAQ, New York. In addition to
that, he has been awarded numerous prizes, including the German Entrepreneur
of the Year prize in 1999 by Ernst & Young, SAP and “Manager Magazin.”
Friedrich von Bohlen holds a diploma in biochemistry from the University
of Zurich and a PhD in neurobiology from the Swiss Federal Institute of Technology (ETH) in Zurich.
None of the unrelated companies that Friedrich von Bohlen und Halbach is
a major shareholder of or is on the board or had any business activities with
the Company.
Italian (born 1963), has been a Board Member of Cosmo Pharmaceuticals S.p.A.
since 2006.
He is senior partner at Studio Legale Edoardo Ricci e Associati, Milan, where
he specializes in company law, mergers and acquisitions. He joined the firm
in 1988. From 1987 to 1988 he was assistant of the central director for corporate
matters at Fininvest Group. From 1994 to 1998 he was director of II.PP.A.B.
Milan (formerly ECA), a charitable institution owning hospitals and specialized
in elderly care.
He is a member of the board of Santarus Inc (NASDAQ: SNTS)
Alessandro Della Chà has a degree in law from the University of Milan, Italy,
and an LL.M. in European Union commercial law from the University of Leicester, United Kingdom. He is a lecturer in conferences and seminars held by universities and institutions on commercial and company law issues.
Studio Legale Edoardo Ricci e Associati provides a series of legal advisory
services to the Company.
Dieter A. Enkelmann
Swiss (born 1959), has been a Board Member of the Company since 2006.
Dieter A. Enkelmann is Chief Financial Officer and member of the executive
management board of Julius Baer Group Ltd., the largest independent Private
Banking Group in Switzerland, listed on the SIX Swiss Exchange. From 2003 to
2006 he was Chief Financial Officer of Barry Callebaut AG, the world’s leading
manufacturer of high-quality cocoa, chocolate and confectionary products, which
is listed on the SIX Swiss Exchange. From 1997 to 2003 he was at Swiss Re as
head of finance of the business unit financial services and as head of corporate
finance, treasury, and investor relations. From 1985 to 1997 he held several positions at Credit Suisse, both in Zurich and London. Dieter A. Enkelmann is a
board member of iNNutriGEL AG, in Schlieren, Switzerland, and a member of
the board, the audit committee, the nomination committee, head of the compensation committee of SIX-listed GAM Holding Ltd., in Zurich, Switzerland.
Julius Baer bank provides no services for the Company.
He graduated from the University of Zurich, where he obtained a degree
in law.
Maria Grazia Roncarolo
Italian (born 1954), has been a Board Member at Cosmo Pharmaceuticals since
April 2012.
Dr Maria Grazia Roncarolo is the Scientific Director of the San Raffaele
Scientific Institute in Milan, Italy, and Professor in Pediatrics, School of Medicine
and Surgery, San Raffaele Vita-Salute University, in Milan.
Dr Maria Grazia Roncarolo studied medicine and has a PhD from the University of Torino. She has extensive experience in immunological research focusing
on the mechanism of tolerance in patients transplanted with hematopoietic
stem cells and spent more than 8 years at the DNAX Research Institute of Molecular and Cellular Biology, Human Immunology Department, in Palo Alto,
California, USA, researching on the basic biology of hematopoietic stem cells,
cytokines and cytokine receptors discovery and biology, and immunological
tolerance.
Dr Roncarolo has actively collaborated to the development of research
programs for industry and biotechnology companies, having served as member of Schering Plough’s “Cytokine Team” (1993–1996), as a founding member
of the scientific advisory board for Kinetix Pharmaceutical (1997–2000), and as
Consultant for Novartis Pharmaceutical in the areas of immunology, transplantation and gene transfer (1997–2002).
In 2000, Maria Grazia Roncarolo was awarded the honor of Ufficiale
dell’Ordine “Al Merito della Repubblica Italiana” for scientific merits. In 2005
she was elected member of the Academia Europea of Sciences. Maria Grazia
Roncarolo is among the world’s most cited scientists according to ISIHighlyCited.com (Thomson Reuters, Philadelphia). She is inventor of 14 international
patents issued or pending.
Operating principles of the Board of Directors
The general policies and the management of the Company are the responsibility
of the Board of Directors, which establishes the strategic, accounting, organizational and financing policies and appoints, recalls and supervises the members
of the Management. Furthermore, the Board of Directors is responsible for the
organization and preparation of shareholders’ meetings and for carrying out
shareholders’ resolutions. The Board of Directors may delegate its authority to
the Executive Committee and/or to the Chief Executive Officer (CEO) and determines the duration of the term and the power of the CEO.
Board of Directors’ meetings are called by the Chairman or by the CEO by
written notice, highlighting the matters to be discussed and sent at least three
days (in case of urgency at least one day) before the date of the meeting.
Five meetings of the Board of Directors took place in 2012.
Board Committees
Compensation Committee
The Compensation Committee assists the Board of Directors in compensationrelated matters, including matters related to the Company’s stock option plan.
The Compensation Committee provides recommendations on and polices for
the compensation of the Members of the Board of Directors, the Management
and other employees. It is composed solely of non-executive Members of the
Board and headed by Alessandro Della Chà. Additional members are Friedrich
von Bohlen und Halbach and Dieter A. Enkelmann.
One meeting of the Compensation Committee took place in 2012.
Nomination Committee
The Board of Directors has established a Nomination Committee, which enacts
guidelines for selecting candidates for the election to the Board of Directors in
the event when one or more Directors are replaced pursuant to section 2386 of the
Italian civil code. It also enacts guidelines for the appointment of Senior Management and makes arrangements to select such candidates. The Nomination
Committee is composed solely of non-executive Members of the Board and is
headed by Alessandro Della Chà. Friedrich von Bohlen und Halbach and Dieter A.
Enkelmann are additional members. According to Italian law the nomination of
Board Members is inalienably reserved to shareholders and thus not an area of
responsibility of the Nomination Committee. The Nomination Committee met
once in 2012.
Audit Committee
The Board of Directors has established an Audit Committee. The Audit Committee surveys the effectiveness of the external audit and the internal control and
risk management processes. It also evaluates the state of compliance with
norms within the Company.
Additionally, the Audit Committee reviews – together with the Chief
Financial Officer, and, separately, as the case may be, with the head of the
external audit – the individual and consolidated financial statements as well as
the interim statements intended for publication. It decides whether the individual and consolidated financial statements can be recommended to the
Board of Directors for presentation to the general shareholders’ meeting. The
Audit Committee assesses the performance and the fees charged by the external auditors and ascertains their independence. It examines compatibility of
the auditing responsibilities with any consulting mandates. The Audit Committee is composed solely by non-executive Board Members and is headed by
Dieter A. Enkelmann. Gianluigi Bertolli and Alessandro Della Chà are additional members.
Two meetings of the Audit Committee took place in 2012.
The Management is responsible for the operational management of Cosmo
Pharmaceuticals S.p.A. in line with the instructions issued by the Board of
Directors. Cosmo has grown based on a strong, focused Management Team
encompassing skills across the spectrum of disciplines required for an emerging
specialty pharmaceutical company. The Company has an internationally experienced and entrepreneurial Management Team of pharmaceutical industry executives and recognized experts in their field with diverse backgrounds and
complementary skills in research, development, regulation, manufacturing,
sales, marketing and finance.
M. S. Ajani
Founder and
G. Cipriano
Chief Operating Officer
M. Pedrani
Head of Business
Development Generics
R. Villa
Chief Manufacturing Officer
L. Moro
Chief Scientific Officer
G. Celasco
Chief Medical Officer
F. Rasetti
Regulatory
Manager
A. Lovati
Quality
Assurance
Manager
D. Malavasi
Qualified
Person
C. Tanner
Chief Financial Officer
M. Lecchi
Deputy Chief Financial Officer
R. Bozzella
R&D
Regulatory
Affairs
Manager
R. Jones
Clinical
Operations
Manager
Members of the Management
Mauro S. Ajani
Italian (born 1955), Chief Executive Officer of Cosmo Pharmaceuticals S.p.A.
and Member of the Board of Directors.
Roberta Bozzella
Italian (born 1974), R&D Regulatory Affairs Manager of Cosmo Research & Development S.r.l. She graduated in pharmaceutical chemistry from the University of Milan, Italy, and holds a master in regulatory affairs from the University
of Pavia, Italy. She joined the Group in 2002 and is responsible for the regulatory activities of the pipeline development projects. From 1999 to 2002 she worked
as a quality assurance manager at a small Italian pharmaceutical company
(Società Prodotti Antibiotici S.p.A.).
Giuseppe Celasco
Italian (born 1941), Chief Medical Officer of Cosmo Research & Development
S.p.A. He graduated in medicine and surgery at the University of Genova, Italy
(1967). He began his career as a researcher in the field of toxicology and endocrinology in the Warner-Vister Institute for Research on Steroids in 1969, and was
subsequently appointed responsible for the department of pharmacology and
toxicology within the same research institute (1972–1985). He taught experimental endocrinology at the University of Pavia (1972), and general pathology
and ocularpathology at the Advanced Institute of Optometric Sciences of Milan,
Italy (1973–1975). From 1985 to 1995 he was senior medical advisor of Parke Davis
S.p.A., and, from 1995 to 2000, director of scientific affairs and regulatory
affairs manager within the same company. He is author of 61 scientific contributions. He joined the Group in 2001.
Giuseppe Cipriano
Italian (born 1957), Chief Operating Officer of Cosmo S.p.A. since 2001. From 1996
to 2001 he was managing director of Gianfranco Ferrè S.p.A. and Gianfranco
Ferrè US Holding, the well-known fashion group. From 1990 to 1996 he was the
managing director of Cordara S.p.A. and Ecor Impianti S.r.l., companies in
the field of commercialization of oil products and related services. From 1982 to
1990 he was a vice president (vicedirettore) in the Public Administration Inland
Revenue Department in Milan, Italy.
Richard Jones
British (born 1969), Clinical Operations Manager of Cosmo Technologies Ltd.,
which is the interface of the Group with CROs in charge of conducting the clinical
trials. He joined the Group in February 2006. From 1996 to 1999, Richard Jones
worked as a clinical scientist for the National Health Service, University Hospital
Birmingham, UK. From 1999 to 2005, he worked with ICON Clinical Research,
first as a drug safety associate, thereafter as a project manager and finally as a
senior project manager. Before he joined the Group, he held a position with
Nabi Bio-pharmaceuticals Europe as a clinical project manager. He holds a PhD
in clinical biochemistry from Trinity College, Dublin, Ireland.
Marco Lecchi
Italian (born 1964), Deputy Chief Financial Officer of Cosmo Pharmaceuticals
S.p.A. He joined the Group in 2001; from 1999 to 2001 he worked as director of administration of Gianfranco Ferrè S.p.A. and its subsidiary GF Manufacturing
S.r.l., and from 1992 to 1999 he worked at an international audit firm. In 1999 he
gained admittance to the Official Register of Public Auditor. Marco Lecchi
obtained his degree in economics and business administration, specializing in
financial administration, from the Bocconi University in Milan, Italy.
Andrea Lovati
Italian (born 1967), Quality Assurance Manager of Cosmo S.p.A. since 1999.
From 1997 to 1999 he was responsible for the quality control of labs in Cosmo
S.p.A. From 1996 to 1997 he was responsible for the quality control chemical
lab in Parke Davis S.p.A. He began his career as an analyst in Formenti S.p.A.
(1995). He holds a degree in pharmaceutical chemistry and technology from
the University of Milan, Italy.
Davide Malavasi
Italian (born 1972), Qualified Person (Italian law requirement) of Cosmo S.p.A.
since September 2011. He joined Cosmo S.p.A. in 2003. From 2007 to 2011 he
was Production Manager of Cosmo S.p.A. From January 2006 to December 2006
he was Production Assistant of Cosmo S.p.A. and from 2003 to 2005 he was a
Quality Control Assistant for Cosmo S.p.A. He holds a degree in chemistry and
pharmaceutical technology.
Luigi Moro
Italian (born 1951), Chief Scientific Officer of Cosmo Research & Development
S.p.A. He graduated in chemistry and pharmacology at the University of Milan,
Italy. He began his career in 1976 with Farmitalia – Carlo Erba, working on
discovery/preclinical phase technological projects and the development of new
drug administration systems, with particular concentration on anti cancer
drugs. From 1985 to 1988, with Recordati Industria Chimica e Farmaceutica
S.p.A., he collaborated on the direction of technological projects of the parent
company and in the definition of drug delivery systems developed by the
subsidiary company Pharmetrix, a Californian company specializing in the
application of polymer membranes and control systems for problems relating
to the controlled administration of drugs. He was appointed manager of the
pharmaceutical technology laboratories of Poli Industria Chimica S.p.A. in
1988 and from 1990 to 1995, he coordinated the company’s research activities
and industrial applications in the pharmaceutical, synthesis and fermentation
sector. In 1996, he became manager of industrial development, responsible
for the identification of the technical resources and facilities for the industrial
implementation of development projects. He is the author of numerous
scientific publications and papers and inventor of numerous international
technology patents. He joined the Group in 1999.
Massimo Pedrani
Italian (born 1954), Head of Business Development Generics of Cosmo S.p.A.,
began his career as a researcher in the galenical laboratory of Midy S.p.A.
(Sanofi Group) in 1981 and then worked as responsible for the pharmaceutical
development department in Pierrel S.p.A. from 1983 to 1987. He then joined
Farmitalia – Carlo Erba (Erbamont Group) as supervisor of external research
institutes and head of the industrial galenics laboratories until 1992. During
1992 to 1996, he was the managing director of the Italian subsidiary of Applied
Analytical Industries Inc., a US company operating in the pharmaceutical
research and services sector. Since 1997, he has worked as a pharmaceutical
business development and regulatory affairs consultant through his own
company, Emmepi Pharma SAS. He joined Cosmo as an External Consultant
in July 2001. He graduated in chemistry and pharmaceutical technology from
the University of Pavia, Italy. He has been member of the board of the Italian
Pharmaceutical Association since February 1992, and of the Controlled Release
Society Italian Chapter since June 1998.
Francesca Rasetti
Italian (born 1966), Regulatory Manager of Cosmo S.p.A. since 1999. She graduated in pharmacy from the University of Milan, Italy, in 1990. She holds a
specialization in pharmacology and a PhD in pharmacognosy from the University
of Milan. From 1996 to 1997 she worked for Parke Davis S.p.A. as senior analyst
in laboratory and was responsible for the analytical validation studies. She
began her career at Cosmo in 1997 as a Laboratory Senior Analyst. She is responsible for the supervision of the manufacturing process validation and for the
cleaning validation.
Chris Tanner
Swiss (born 1951), Chief Financial Officer of Cosmo Pharmaceuticals S.p.A. and
Member of the Board of Directors.
Roberto Villa
Italian (born 1943), Chief Manufacturing Officer, joined Cosmo S.p.A. when it
was established. He has significant experience in multinational pharmaceutical
companies. He began his career as a laboratory analyst, and was promoted
over the years to Production Manager, Head of Development Laboratories, and
finally, to the Head of Quality Qontrol and Quality Assurance Laboratories.
Given the experience acquired in various pharmaceutical sectors, he was
appointed as Chief Manufacturing Officer of Cosmo S.p.A. and is responsible for
the supervision of all industrial, logistic and quality aspects of its production
facilities.
Board of Statutory Auditors
The Board of Statutory Auditors is composed of three Permanent Auditors, plus
two Deputy Auditors, with priority given to the eldest, who would automatically replace a Statutory Auditor who resigns or is otherwise unable to serve as a
Statutory Auditor. At least one Permanent Member and one Deputy Member
of the Board of Statutory Auditors must be registered with the National Register
of Auditors (Registro dei Revisori Contabili). The Statutory Auditors are elected
at the shareholders’ meeting, they remain in office for three years and their
mandate expires as of the date of the meeting called to approve the financial
statements relating to the third accounting period of their office.
The Board of Statutory Auditors oversees the Company’s compliance with
the law and with the Articles of Association, verifies the Company’s adherence
to good principles of administration, and assesses the adequacy of the Company’s internal controls and accounting reporting systems, as well as the effectiveness of the provisions concerning the supply of information to and from the
Company’s subsidiaries. The review performed by the Board of Statutory Auditors does not constitute an audit in accordance with Italian auditing standards.
Members of the Board of Statutory Auditors
At the Annual General Meeting held on 20 April 2012, the new Board of Statutory
Auditors was appointed for a three-year period, eligible to successive terms following Italian civil code rules:
_ Maria Cristina Chioda (born 1967), Chairman of the Board of Statutory
Auditors
_ Marco Pasero (born 1966), Permanent Auditor
_ Andrea Righetti (born 1955), Permanent Auditor
Their mandate will expire at the date of the meeting for the approval of 2014
financial statements.
Compensation, shareholdings and loans
Compensation of Board of Directors and Board of Statutory Auditors
According to Italian law the total compensation of the Board of Directors is set
by the ordinary shareholders’ meeting, and the allocation is made by the Board
of Directors. Compensation for the three-year period starting 2012 has been set
by Cosmo Pharmaceuticals S.p.A.’s ordinary shareholders’ meeting on 20 April
2012, at EUR 400 thousand per year for the whole Board. Mauro S. Ajani, as
Chairman and CEO, has a total compensation of EUR 250 thousand. The compensation of the other Members of the Board of Directors consists of a fixed
annual remuneration of currently EUR 30 thousand.
The compensation of the Members of the Board of Statutory Auditors is in
accordance with the professional fees set by the National Association of Public
Auditors. Compensation for the three-year period starting 2012 has been set by
Cosmo Pharmaceuticals S.p.A.’s ordinary shareholders’ meeting on 20 April
2012 at EUR 35 thousand per year.
Compensation of Board of Directors and Board of Statutory Auditors
EUR
Board of
Directors
Mauro S.
Ajani
Function
Chairman
(from
Base compensation
Additional
Cash bonus
compensation
Fringe
Stock
benefits
Total com-
options
pensation
234,936
–
–
–
–
234,936
30,000
–
–
–
–
30,000
30,000
–
–
–
–
30,000
30,000
–
–
–
–
30,000
177,000
–
70,000
–
–
247,000
30,000
–
–
–
–
30,000
21,000
–
–
–
–
21,000
24,064
–
–
–
–
24,064
577,000
–
70,000
–
–
647,000
20.04.2012)
and CEO
Gianluigi
Bertolli
Alessandro
Della Chà
Dieter A.
Enkelmann
member,
non-
executive
member,
non-
executive
member,
non-
executive
Hans
member,
Tanner *
CFO
Christoph
executive
Friedrich
member,
und Halbach
executive
von Bohlen
non-
Maria
member,
Roncarolo
tive (from
Grazia
Rolf Stahel
non-execu20.04.2012)
non-executive Chair-
man (until
19.04.2012)
Total
*
Compensation as CFO
Compensation for Management
The compensation of the members of Senior Management is proposed by the CEO
and set and reviewed annually by the Nomination and Compensation Committee of the Board of Directors who then requests the approval by the full Board
of Directors. The compensation policy of Cosmo is based on the following:
a) The compensation consists of base salary, bonus, and stock-based remuneration. In addition the Company supports company cars for senior
executives, the mandatory social security payments, and certain medical
and insurance coverage.
b) Only distribute bonuses and stock-based remuneration if the Company is
profitable.
c) To offer an Employee Incentive Plan for workers, employees and junior
managers.
d) To offer bonuses to executives if certain predetermined goals are attained.
e) The overall level of remuneration including the bonus is dependent on
the overall profitability but it is capped by the average level of total compensation paid by comparable companies. These comparable companies
are: Acino, Basilea, Evolva, and Siegfried.
f) The CEO bases his proposal for the overall level of remuneration and the sum
that is to be distributed in the bonus pool on the level of the overall profitability of the Company and proposes individual allocations based on the
contribution of each person to the attainment of this profitability and of the
strategic goals formulated for each year. The CEO bases his proposal on an
annual basis on the level of achievement of the Company’s goals, which, if
profitability is attained, is related to the key value drivers of the Company
like the management of the clinical trials, the product development plan,
the development of key formulations, the identification of new MMX® projects, licensing and M&A transactions, financing measures, budgetary
discipline and the maintenance of key operational success factors such as
clean approvals for manufacturing by regulatory agencies and clients and
the maintenance of productivity ratios such as machine time and work
days lost. The Compensation Committee’s reviews of the CEO’s proposal will
be based on the experience of the members of the committee and publicly
available information and in case of need, it will also get advice from leading
human resources consulting firms with regards to remuneration packages
required to attract internationally experienced senior executives from the
biopharmaceutical industry.
Cosmo does not disclose specific objectives since these would signal areas
of strategic focus and possibly impair the Company’s ability to excel in the
competitive environment.
EUR
No. of
members
12 members
highest paid of 12 member
Base
compen-
Cash bonus
sation
Fringe
Stock
benefits
Total
options
compensation
1,063,834
194,547
17,916
13,322
1,289,619
155,000
70,000
–
–
225,000
Additional fees and remuneration
In 2012, Cosmo Bioscience Inc., a company controlled by the same ultimate
shareholders as Cosmo Pharmaceuticals S.p.A., highly experienced in biological analysis, carried out scientific tests and development activities for the
group in the total amount of EUR 1,193 thousand consisting of work on a cancer
diagnostic and on Methylene Blue MMX®.
Studio Bertolli, through its managing partner Gianluigi Bertolli, who is
the Company’s tax advisor on the majority of Italian tax issues: EUR 80 thousand.
Studio Legale Edoardo Ricci e Associati, Milan, through the intermediation
of Avv. Alessandro Della Chà, who is the Company’s legal advisor on all Italian
and many international corporate matters: EUR 250 thousand.
Stock option plan
The extraordinary shareholders’ meeting of 14 December 2006 authorized the
increase of the share capital of a maximum of nominal EUR 378,000 with the
issue of 1,513,200 new shares at the service of an employee stock ownership
plan (ESOP), to be implemented within the following five years. At the shareholders’ meeting the Board of Directors was formally authorized to execute
such plan.
On 18 December 2007, the Board of Directors granted a total of 1,013,568
options with a vesting period of three years and an exercise price of CHF 22 per
share, and expiring at 14 December 2011. The fair value of options granted,
determined using the Black-Scholes valuation model, resulted in a value of
CHF 3.14 per option.
The general assembly of shareholders on 15 April 2010 revoked the first
approval and replaced it by a new approval granting the Board a new authority
to again issue 1,513,200 shares up to 15 April 2015. On 30 April 2010 the Board of
Directors decided to extend the exercise period of the existing plan to 15 April
2015 (originally 14 December 2011).
This modification to the original stock option plan (SOP) has determined
the variation in the fair value of options: therefore the difference in the fair
value estimated as at 30 April 2010 considering the original SOP expiring on
14 December 2011 and the same SOP with extended expiring date to 15 April 2015
(both with vesting date 18 December 2010), was charged to profit and loss over
the residual vesting period (30 April 2010 – 18 December 2010). The total variation of fair value amounts to CHF 0.051 per option, for a total amount of CHF
51,692. The options granted were recognized as costs over the vesting period
ended on 18 December 2010. Of the total of 1,013,568 options granted, as at
31 December 2012, 852,588 options are outstanding (after 15,264 options forfeited and 145,716 options exercised).
On 22 March 2012, the Board of Directors granted a total of 15,264 options
with a vesting period of three years and an exercise price of CHF 22 per share,
and expiring at 15 April 2015. The fair value of options granted, determined on
the basis of a binomial tree generated by the Fincad program – technique similar to the Black-Scholes valuation model –, resulted in a value of CHF 4.06 per
option. The options granted are recognized as costs over the vesting period.
Below the situation at year end 2012:
Non-executive Members of the Board
Granted
Forfaited
Exercised
Expired
Outstandig
Gianluigi Bertolli
40,236
–
–
–
40,236
Friedrich von Bohlen und Halbach
40,236
–
–
–
40,236
40,236
–
–
–
40,236
Dieter A. Enkelmann
40,236
–
–
–
40,236
117,936
–
117,936
–
–
278,880
–
117,936
–
160,944
Other non-executive resigned
Of which exercisable
Executive Members of the Board and
Members of Management detailed if
160,944
Granted
Forfaited
Exercised
Expired
Outstandig
allocation exceeds 100,000 options
Chris Tanner
248,364
–
–
–
248,364
Giuseppe Cipriano
131,812
–
–
–
131,812
Luigi Moro
131,812
–
–
–
131,812
Other members of the Management
222,700
–
27,780
–
194,920
Other members of the Management
15,264
15,264
–
–
–
749,952
15,264
27,780
–
706,908
resigned
TOTAL
691,644
1,028,832
15,264
145,716
–
867,852
–
–
–
–
852,588
Share purchases by the Company
The Company has a market-making agreement with a well-known bank. The
Company selectively buys and sells shares to support these activities. In 2012 the
Company purchased 620 and sold 498,039 treasury shares (of which 145,716 in
relation to the ESOP exercise and 319,823 in relation to the acquisition of CCRE)
with a net gain of EUR 2,049 thousand directly recognized in the equity.
At year end the Company had 993,889 own shares on its books at an average
purchase price of EUR 16.56 or CHF 19.96 per share.
Loans granted by the Group to Members of the Board of Directors or the
Management
No company of the Group has granted any loans or guarantees to any Member
of the Board of Directors, the Board of Statutory Auditors or members of the
Management.
Shareholders’ rights
Each share carries one vote. Holders of the shares are entitled to attend and vote
at shareholders’ meetings on the basis of one vote for each share held, although
shares held in breach of certain provisions of applicable law and/or the Company’s Articles of Association may not be voted.
An investor who acquires 33.33% or more of the Company’s voting share
capital has to launch a public offer for all shares as required Swiss tender offer
rules apply. The Board of Directors has the authority under the Articles of Association to take any and all action it deems necessary, in its sole discretion, in
order to cause a shareholder to comply with this obligation, and to disallow any
shareholder who does not comply with its obligation to launch a public offer to
vote at the shareholders’ meeting.
The Articles of Association also require investors in the shares to notify the
Company of certain acquisitions and dispositions of shares.
To attend a meeting, the owners of shares are required to instruct any relevant authorized intermediary with which their accounts are held to provide to
the Company admission certificates or notice pursuant to section 2,370 of the
Italian civil code at least two working days prior to the first date set for the
meeting.
The Company’s shareholders may appoint proxies in writing. Proxies are
valid only for single meetings (including, however, the first, second and subsequent calls). General proxies can be released only by companies, associations,
foundations or other legal entities or institutions, and only to their own
employees.
Directors, Statutory Auditors, Independent Auditors and employees of the
Company or of its subsidiaries, or a subsidiary itself, may not act as proxies for
shareholders. A shareholder may also appoint another shareholder to represent it at shareholders’ meetings.
Dividends, allocation of annual net profits and other financial rights
As a matter of practice, annual dividends are proposed by the Board of Directors
and are subject to approval by the shareholders, usually at the annual shareholders’ meeting, which must be convened within six months after the end of
the fiscal year to which the dividend relates. Dividends are payable on the date
specified by the shareholders’ resolution at the annual meeting on the account
of each shareholder through the relevant intermediaries.
Pre-emptive rights
New issues of shares, whether shares or other classes of share capital, are
authorized by a resolution of the shareholders passed at an extraordinary meeting. Pursuant to Italian law, holders of ordinary shares are entitled to subscribe
for new issue of shares, debt instruments convertible into shares and any other
warrants, rights or options entitling the holder to acquire shares, in each case
in proportion to their respective shareholdings.
Minority shareholders’ rights
Minority shareholders have the right to appoint one Director and one Statutory
Auditor of the Company, each shareholder may bring to the attention of the
Board of Statutory Auditors facts or acts that such shareholder believes to be
wrongful. If shareholders, representing at least 2.0% of the share capital of the
Company, submit a complaint to the Board of Statutory Auditors, the Board
must investigate without delay and must report its findings and recommendations to the shareholders’ meeting.
Shareholders representing at least 5.0% of the share capital of the Company
have the right to report major irregularities in the Management of the Company
to the court where the Company has its domicile.
For companies whose shares are listed on recognized stock exchanges, a
qualified minority of shareholders representing 2.5% of the outstanding share
capital can bring an action against the Board of Directors for the benefit of the
Company as a whole. This action can be settled by the Company only if there is
no opposition of shareholders representing 5% of the outstanding share capital.
The same action can be brought against the Statutory Auditors, as they are
jointly and severally liable with the Directors, for whatever negligence or misconduct of the latter.
Independent Auditors
Duration of the mandate and term of office of the Independent Auditors
Cosmo Pharmaceuticals S.p.A.’s ordinary shareholders’ meeting on 20 April
2012 has appointed the auditing company Mazars S.p.A., Milan, as its Independent Auditors for the three-year period 2012/2013/2014.
Such appointment shall expire with the approval of the 2014 financial statements. Carlo Consonni is the partner in charge for the report of the Independent
Auditors.
Auditing honorarium
Mazars S.p.A.’s honorariums for 2012, including the honorariums for the controlled companies, amounted to EUR 81 thousand.
Additional honorariums
Mazars S.p.A. did not perform any additional services for the Company. No
other honorariums have been paid to the Independent Auditors.
Organizational Model pursuant to Legislative Decree No. 231/2001 and
subsequent changes
In 2011 the Company and its controlled Italian subsidiaries adopted the Organizational Model required pursuant to Legislative Decree No. 231/2001. The Model
is designed to prevent the perpetration of the unlawful acts referred to in the
above-mentioned decree, and consequently, shield the Company from administrative liability. The Model, which was adopted following a detailed analysis of
the Company’s operations to identify activities with a risk potential, includes a
series of general principles, rules of conduct, control tools, administrative procedures, training and information programs, and disciplinary systems that are
designed to prevent, as much as possible, the occurrence of the above-mentioned crimes. The Board of Directors also established an Oversight Board (OB),
which is responsible for ensuring that the Model is functioning effectively and
is kept up to date, and is required to report to the Board of Directors and the
Board of Statutory Auditors periodically.
On 28 October 2011, each Italian group company appointed its OB. Its members include two independent professionals, and the annual compensation for
the Italian group companies is EUR 24,000.
Change of control and defense measures
Information and control instruments vis-à-vis the Board of Directors
Italian law prescribes the nomination of an external Board of Statutory Auditors, which has extensive rights to report its findings to the Board of Directors.
The Board of Directors is currently scheduled to meet at least four times a year
plus a budget meeting plus a meeting to discuss and approve the financial statements. Further meetings will be called as needed. The Board of Directors has set
a series of benchmarks and parameters to track the financial, scientific, product, and production development of the Company. These benchmarks and
parameters are regularly reviewed.
Information policy
Cosmo Pharmaceuticals S.p.A. is committed to a clear, transparent, consistent
and nonselective disclosure of material information. In accordance with the
Italian and the SIX Swiss Exchange rules, Cosmo Pharmaceuticals S.p.A. provides complete and detailed information on annual and half-year reports. The
Company publishes additional information on important events.
The Company has formulated a corporate commitment to keep its investors
fully apprised of the Company’s developments. The CEO, CFO and Head of Investor Relations are responsible for communication with the financial community. The Company adheres strictly to the ad hoc publicity rules of the SIX Swiss
Exchange and has issued all press releases to a wide range of international agencies as required by the SIX Swiss Exchange. In selective cases such as the presentation of the half-year report, the Company has also invited shareholders and
the financial press to conference calls and selective news events.
Pursuant to the Articles of Association, notices are made by publication in a
newspaper chosen among “Il Corriere della Sera,” “La Repubblica,” “Il Sole 24
Ore,” “The Financial Times” and the “Neue Zürcher Zeitung” or in the “Gazzetta
Ufficiale della Repubblica Italiana.”
Notices are also to be published as required by the listing rules of the SIX
Swiss Exchange.
Financial review
Chris Tanner,
manufacturer of Lialda®/Mezavant®/Mesavancol®:
Chief Financial
during 2012 Cosmo delivered to Shire and Giuliani
Officer
206.5 million tablets, an increase of 58.3 million
tablets or 39.4%.
Revenue from manufacturing of generic-products and specialty drugs decreased by EUR 336 thou-
In 2012, Cosmo’s revenue increased by EUR 26,028
sand or 3.1% to EUR 10,617 thousand. No clients
thousand or 77.7% to EUR 59,537 thousand; net
were lost; the decrease was due to slight variations
profit after taxes increased by EUR 11,718 thousand
in generics orders.
or 154.1% to EUR 19,324 thousand.
Revenue from royalties increased by 16.2% to
“Licence fees, up-front fees and milestones”
jumped to EUR 21,910 thousand (EUR 763 thousand
EUR 11,674 thousand, practically all relating to
in 2011) because of an USD 4,000 thousand mile-
the royalties on Lialda®/Mezavant®/Mesavancol®
stone (taken in 906,412 Santarus shares at an aver-
sales: in 2012, Shire increased its revenue from
age price of USD 4.41) received from Santarus upon
Lialda®/Mezavant® by 7.4% to USD 399.8 million.
filing of the NDA for Budesonide MMX®/Uceris™
Revenue from manufacturing of MMX® products
and an USD 25,000 thousand license fee received
increased by 36.0% or EUR 3,886 thousand to EUR
from Medicis upon signing of the licensing agree-
14,674 thousand. Cosmo continues being the sole
ment for CB-03-01.
Revenue
Year ended
EUR 1,000
Year ended
31 December 2012
31 December 2011
% of revenue
% of revenue
Manufacturing on behalf of third parties:
Manufacturing of generic products and specialty drugs
10,617
17.8
10,953
32.7
Manufacturing of MMX® products
14,674
24.6
10,788
32.2
Related services
517
0.9
714
2.1
Other revenues from sales
145
0.2
248
0.7
Licence fees, up-front fees and milestones
21,910
36.8
763
2.3
Royalties
11,674
19.6
10,043
30.0
Total revenue
59,537
100.0
33,509
100.0
Overall, the revenue related to own products
(which includes manufacturing of MMX® products,
license fees, up-front fees, milestones and royalties)
increased by 123.5% to EUR 48,258 thousand and
now they represent 81.1% of the total revenue.
Year ended
EUR 1,000
Year ended
31 December 2012
31 December 2011
% of revenue
% of revenue
Own products
48,258
81.1
21,594
64.4
Third-party products
11,279
18.9
11,915
35.6
Total revenue
59,537
100.0
33,509
100.0
76 Cosmo Pharmaceuticals Annual Report 2012 – Financial review
Net operating expenses
Year ended
Year ended
31 December 2012
EUR 1,000
31 December 2011
% of revenue
Other income
% of revenue
70
0.1
756
2.3
Cost of sales
(16,259)
(27.3)
(14,492)
(43.2)
Research and development costs
(10,916)
(18.3)
(5,173)
(15.4)
(5,977)
(10.0)
(5,692)
(17.0)
(33,082)
(55.6)
(24,601)
(73.4)
Selling, general and administrative costs
Total net operating expenses
Other income in 2012 declined because there were no
Group capitalized development costs of EUR 465
further tax credits. Cost of sales increased by 12.2%,
thousand including outsourced clinical trial costs,
far less than the overall manufacturing revenue
API and excipients for the preparation of clinical
increase, because of a shift to more profitable own
batches and personnel expenses directly related to
products and contracts executed for third parties
Budesonide MMX® project (in 2011 the amount capi-
required us to buy less chemical entities or excipi-
talized was EUR 1,886 thousand). Selling, general
ents in the market. Research and development costs
and administrative costs increased under-propor-
expensed in the profit and loss accounts increased by
tionally by 5.0% to EUR 5,977 thousand, because
111.0% due to the phase II costs of the CB-17-01 Meth-
costs were kept under tight control.
ylene Blue MMX® and CB-03-01 Acne. In 2012 the
Operating expenses as per nature
Year ended
Year ended
31 December 2012
EUR 1,000
31 December 2011
% of revenue
Other income
% of revenue
70
0.1
756
2.3
338
0.6
281
0.8
Raw materials and consumables used
(5,997)
(10.1)
(5,488)
(16.4)
Personnel expenses
(8,937)
(15.0)
(8,141)
(24.3)
Outsourced preclinical and clinical trial costs
(6,485)
(10.9)
(2,088)
(6.2)
Other operating expenses
(9,529)
(16.0)
(7,701)
(23.0)
Depreciation and amortization
(2,542)
(4.3)
(2,220)
(6.6)
(33,082)
(55.6)
(24,601)
(73.4)
Changes in inventories of finished goods and work in progress
Financial review – Cosmo Pharmaceuticals Annual Report 2012 77
Changes in inventories of finished goods and
when Budesonide MMX® entered phase III, out-
The Company continues manufacturing on order
ide MMX® European trial were capitalized and
so inventory is low. The slight increase was primar-
expenses for the US portion of the Budesonide
ily due to the increase in work in progress which
MMX® phase III clinical trials were reimbursed by
increased by EUR 399 thousand to EUR 730 thousand,
Santarus, following the strategic collaboration
and is mainly related to MMX® products.
agreement signed in December 2008. In 2012 R&D
work in progress
sourced clinical trial costs relating to the Budeson-
costs of EUR 465 thousand were capitalized, 75.3%
less than EUR 1,886 thousand capitalized in 2011.
Total raw materials and consumables used increased
by EUR 509 thousand or 9.3% to EUR 5,997 thousand.
This was less than the increase in manufacturing
Other operating expenses increased by EUR 1,828
income because of the change in mix in the revenue
thousand or 23.7% to EUR 9,529 thousand. The
from manufacturing on behalf of third parties.
main part of the increase was due to increased
costs of consultancies (plus EUR 272 thousand to
Personnel expenses
EUR 1,022 thousand) and increased travel expenses
Personnel expenses increased by 9.8% in 2012.
(plus EUR 358 thousand to EUR 713 thousand) in
The average number of persons under employment
conjunction with the reviews of the clinical sites
increased by 11 persons or 7.4%.The table below
in the Uceris™ & Cortiment™ approval processes
shows the number of employees by function as at
and the negotiations which lead to the agreements
31 December 2012.
with Medicis and Intrepid for the development of
CB-03-01. In 2012 other operating expenses also
included EUR 500 thousand as the second license
Employees as at 31 December 2012 by function
Research & Development
Production & Logistics
General, Adm. & Finance,
IT and others
Total
26
16%
114
71%
20
13%
160
100%
Preclinical and clinical trials costs outsourced to
subcontractors and expensed in the profit and loss
mainly refer to CB-03-01 and CB-17-01 Methylene
Blue MMX®: they increased from EUR 2,088 thousand to EUR 6,485 thousand. In 2012 a phase II dose
ranging clinical trial for Acne was initiated in the
USA, costs consequently went up from EUR 1,173
thousand to EUR 3,553 thousand and in 2012 two
phase II b trials were conducted for CB-17-01 Methylene Blue MMX® which increased costs from EUR
213 thousand to EUR 1,804 thousand. Since 2008,
fee to use a patented API in Cosmo project Methylene Blue MMX®. There was no such payment in
2011. Expenses for operating leases declined by
EUR 408 thousand to EUR 1,585 thousand (-20.5%)
because at the end of September 2012 the Company
purchased Cristoforo Colombo Real Estate S.r.l.
(“CCRE”), the real estate company that had been
leasing the manufacturing and office facilities to
the Company.
Depreciation of property, plant and equipment and
amortization of other intangible assets increased
by 14.5% to EUR 2,542 thousand. This was mainly
due to the increase in depreciation of property,
plant and equipment (+EUR 244 thousand or 15.9%)
following the acquisition of CCRE. Amortization of
intangible assets increased by EUR 78 thousand or
11.4%.
Financial income and expenses
Year ended
Year ended
31 December 2012
EUR 1,000
31 December 2011
% of revenue
Financial income
Financial expenses
1.7
1,032
3.1
(579)
(1.0)
(847)
(2.5)
433
0.7
185
0.6
Total financial income (net)
In 2012, net financial income was in line with that
of the previous year. Financial expenses decreased
Assets
Non-current assets
by 31.6% or EUR 268 thousand to EUR 579 thousand
principally because in 2011 they also included EUR
EUR 1,000
391 thousand for interest, accounted to adjust the
Non-current assets
redemption amount of the obligation for the Com-
Property, plant and
pany to purchase its own equity instruments for
% of revenue
1,012
equipment
As at 31 December
2012
2011
22,228
6,001
109
109
cash due to the put options issued in connection
Goodwill
with the BioXell business combination.
Other intangible assets
22,152
21,969
Financial assets
66,070
18,304
1,306
807
–
2,251
111,865
49,441
Income tax expenses
Income taxes increased from EUR 1,487 thousand
in 2011 to EUR 7,564 thousand in 2012.
Current income tax includes cost for IRES and
other corporation taxes and for IRAP (which represents an Italian regional tax levied on profit [loss]
Deferred tax assets
Other non-current
receivables
Total non-current assets
On 26 September 2012 the Company acquired 100%
before tax, plus personnel costs and net financial
charges which are not considered tax-deductible).
Income tax IRES increased by EUR 4,796 thousand or
245.1% to EUR 6,753 thousand. Income tax IRAP
increased by EUR 684 thousand or 238.3% to EUR 971
thousand. Net deferred tax liabilities were reduced
from EUR 757 thousand to EUR 160 thousand.
Cosmo Pharmaceuticals S.p.A. and its Italian
subsidiaries Cosmo S.p.A. and Cosmo Research &
Development S.p.A. have elected to take part in the
domestic tax consolidation program pursuant to
Articles 117/129 of the Consolidated Income Tax Act
of CCRE, the company that owns the real estate,
office buildings and manufacturing facilities which
the Company uses, for a consideration of EUR 13,144
thousand consisting of EUR 7,208 thousand in cash
and 319,823 treasury shares. The book value of “Property, plant and equipment” at the date of acquisition was equal to EUR 16,060 thousand. During the
year investments in plant and equipment mainly for
the establishment of the new Uceris™/Cortiment™
manufacturing line were made in the amount of
EUR 2,066 thousand.
(TUIR).
Other intangible assets consists of costs for fil-
Equity and liabilities
ing and extension of patents and of development
costs on the Budesonide MMX® project capitalized
EUR 1,000
starting from 2008, and as at 31 December 2012
Equity
amounting to EUR 16,810 thousand.
Share capital
In 2012 financial assets available for sale primarily refers for EUR 65,565 thousand to the investment in Santarus shares: as at 31 December 2012,
the fair value of each share (market price NASDAQ)
was equal to USD 10.98, a 231.7% increase from the
end of 2011. Per year end the total position amounted
to 7,878,544 shares which at year end 2012 had a
value amounting to USD 86,506 thousand corresponding to EUR 65,565 thousand (at 31 December
2012 USD/EUR exchange rate).
EUR 1,000
Current assets
As at 31 December
Inventories
2,192
1,838
Trade receivables
6,235
6,586
766
1,305
3,485
5,244
27,302
13,624
Total current assets
39,980
28,597
151,845
78,038
other assets
Total assets
3,749
3,749
Share premium
47,845
47,845
Treasury shares
(16,456)
(24,197)
–
2,162
1,655
1,923
Available for sale financial
51,613
6,897
Retained earnings
16,662
17,212
Profit/(Loss) for the year
19,323
7,599
124,391
63,190
210
244
124,601
63,434
Other reserves
Stock option plan reserve
assets reserve
Equity attributable to
Total equity
2011
Other receivables and
2011
Non controlling interests
2012
Current tax assets
2012
owners of the company
Current assets
As at 31 December
As at 31 December 2012 and 2011, Cosmo Pharmaceuticals had 14,995,743 shares issued, fully subscribed
and paid up, each share with a nominal value of EUR
0.25, for a total share capital of EUR 3,749 thousand.
In 2012 treasury shares were used to partially
finance the acquisition of CCRE and to honour commitments under the stock option plan. Thus treasury
shares held by the company declined by 497.419 to
993,889. Given the high increase in the value of the
Santarus shares, the reserve on financial assets available for sale increased by EUR 44,716 thousand and
The increase of EUR 354 thousand in inventories was
together with the net profit caused the equity attrib-
primarily due to the increase in work in progress
utable to the owners of the Company to rise by EUR
and mainly related to MMX® products.
61,201 thousand or 96.9% to EUR 124,391 thousand per
Trade receivables declined by 5.3%. In spite of
31 December 2012.
the purchase of CCRE and the investment into plant
for the manufacturing of Uceris™ and Cortiment™,
cash and cash equivalents increased by EUR 13,678
thousand or 100,4% reflecting the strong generation
of operating cash.
Non-current liabilities
EUR 1,000
Interest-bearing loans and
borrowings
Employee benefits
Deferred tax liabilities
Total non-current liabilities
Current liabilities
As at 31 December
EUR 1,000
2012
2011
11,040
1,284
385
360
3,440
14,865
Current liabilities
As at 31 December
2012
2011
Interest-bearing loans and
1,797
892
Trade payables
4,010
4,138
2,651
Current tax liabilities
4,637
405
4,295
Other current liabilities
borrowings
Total current liabilities
Non-current liabilities increased by EUR 10,570
1,935
4,874
12,379
10,309
thousand to EUR 14,865 thousand, due to the inte-
Current liabilities increased by 20.1% to EUR 12,379
gration of CCRE: with the acquisition of CCRE the
thousand principally for the increase in current tax
Group acquired two financial leases on the real
liabilities due to the 2012 tax payable, net of advances
estate complex in Lainate (residual as at 30 Septem-
already paid. The increase in short term interest
ber 2012 EUR 8,917 thousand) and one unsecured
bearing loans and borrowings comes from the inte-
bank loan (residual debt as at 30 September 2012
gration of CCRE.
EUR 1,800 thousand). In 2012 the Group incurred in
new financial lease for a total amount of EUR 1,197
thousand for the investment in plant and machinery for production capacity and mainly for the
establishment of the new Uceris™/Cortiment™
manufacturing line.
Consolidated financial
statements
Consolidated income statement
Year ended 31 December
EUR 1,000
Notes
2012
2011
6
59,537
33,509
70
756
Cost of sales
(16,259)
(14,492)
Research and development costs
(10,916)
(5,173)
(5,977)
(5,692)
(33,082)
(24,601)
Revenue
Other income
Selling, general and administrative costs
Net operating expenses
7
Operating result
26,455
8,908
Financial income
8
1,012
1,032
Financial expenses
8
(579)
(847)
26,888
9,093
(7,564)
(1,487)
19,324
7,606
Owners of the company
19,323
7,599
Non controlling interest
1
7
Profit (loss) before taxes
Income tax expenses
9
Profit (loss) for the year
Profit (loss) attributable to:
Earnings per share
EUR
EUR
Basic
10
1.410
0.526
Diluted
10
1.403
0.526
82 Cosmo Pharmaceuticals Annual Report 2012 – Consolidated financial statements
Consolidated statement of comprehensive income
EUR 1,000
Notes
2012
2011
19,324
7,606
14
44,726
744
–
(78)
15, 25
(10)
18
44,716
684
64,040
8,290
Owners of the company
64,039
8,283
Non controlling interest
1
7
Profit (loss) for the year (A)
Gains/(Losses) on fair value of available for sale financial assets
Gains/(Losses) on cash flow hedges
Income tax relating to components of other comprehensive income
Total other comprehensive income, net of tax (B)
Total comprehensive income (A)+(B)
22
Total comprehensive income attributable to:
Consolidated financial statements – Cosmo Pharmaceuticals Annual Report 2012 83
Consolidated statement of financial position
As at 31 December
EUR 1,000
Notes
2012
2011
Property, plant and equipment
11
22,228
6,001
Goodwill
12
109
109
13
22,152
21,969
Financial assets
14
66,070
18,304
Deferred tax assets
15
1,306
807
Other non-current receivables
16
–
2,251
111,865
49,441
Assets
Non-current assets
Current assets
Inventories
17
2,192
1,838
Trade receivables
18
6,235
6,586
Current tax assets
19
766
1,305
Other receivables and other assets
20
3,485
5,244
21
27,302
13,624
39,980
28,597
151,845
78,038
Total assets
As at 31 December
EUR 1,000
Notes
2012
2011
3,749
3,749
Share premium
47,845
47,845
Treasury shares
(16,456)
(24,197)
–
2,162
1,655
1,923
Available for sale financial assets reserve
51,613
6,897
Retained earnings
16,662
17,212
19,323
7,599
124,391
63,190
210
244
22
124,601
63,434
Interest-bearing loans and borrowings
23
11,040
1,284
Employee benefits
24
385
360
25
3,440
2,651
14,865
4,295
Equity
Share capital
Other reserves
Equity attributable to owners of the company
Total equity
Liabilities
Other non-current financial liabilities
Current liabilities
24
1,797
892
Trade payables
26
4,010
4,138
27
4,637
405
28
1,935
4,874
12,379
10,309
Total liabilities
27,244
14,604
151,845
78,038
Total equity and liabilities
Consolidated cash flow statement
As at 31 December
EUR 1,000
Notes
2012
2011
Profit (loss) before taxes
26,888
9,093
Income taxes paid (net)
(2,902)
(1,489)
Tax credit
–
(473)
Interest expenses on current fin. liabilities -put option
–
391
Financial expenses on subsidized loans at amortized cost
8
50
64
Share payment based expenses
29
13
–
11,13
2,542
2,220
24
358
309
Accrual to employee benefits
Provisions write off
Change in inventories
Change in trade receivables
–
(118)
26,949
9,997
(354)
(539)
351
(400)
Change in trade payables
(150)
(1,465)
Change in other receivables and other assets
(260)
769
Change in current financial assets
–
33
Change in other current liabilities
(3,125)
3,253
(77)
21
–
(25)
(333)
(354)
23,001
11,290
Change in current tax liabilities
Change in provisions
Payment of employee benefits
24
Cash flows from operating activities
Investments in property, plant and equipment
11
(2,066)
(1,107)
Investments in other intangible assets
13
(943)
(2,264)
117
12
Disposals of property, plant and equipment
Disposal of financial assets
–
628
Additional investment in Cosmo R&D interests
22
(28)
(55)
Investments in financial assets available for sale
14
(3,040)
–
(5,960)
(2,786)
1,197
–
(1,364)
(1,360)
–
(34)
Cash flows from investing activities
Proceeds from interest-bearing loans and borrowings
Repayments of interest-bearing loans and borrowings
Change in other non-current receivables
Purchase of treasury share
22
(8)
(21,812)
Sale of treasury share
22
3,211
–
5
(6,399)
–
Cash flows from financing activities
(3,363)
(23,206)
Net increase/(decrease) in cash and cash equivalents
13,678
(14,702)
Cash and cash equivalents at the beginning of the year
13,624
28,326
Cash and cash equivalents at the end of the year
27,302
13,624
Net cash flow due CCRE acquisition
Cash at hand
Bank accounts
Advances on invoices and bank overdraft
Total cash and cash equivalents at the end of the year
15
13
27,287
13,611
–
–
27,302
13,624
Net equity as at
1 January 2011
14,995,743 3,749
Put options granted in
29,200
(2,385)
357
1,805 1,952 6,145
68
17,174 301
(1,229)
March 2010 issue of shares:
Total
Retained earnings
Non controlling
interests
Cash flow hedge
reserve
Available for sale
financial assets reserve
Stock option plan
reserve
Capital contribution
for loss coverage
Contribution reserve
Treasury shares
Share premium
Share capital
EUR 1,000
Number of shares
Consolidated statement of changes in equity
58,366
(1,229)
adjustment to fx change
Put options exercise and re-
lated treasury shares purchase
19,823 (19,956)
(133)
(1,856)
(1,856)
as at 31 December 2011
Transactions with treasury
shares
Write off of financial debt
51
for put options not exercised
51
9 (64)
Additional investment
in subsidiary interests
Stock option forfeited during
(29)
the year
Total comprehensive income
for the year
(55)
29
752
(68)
7,599
–
7
8,290
Net equity as at
14,995,743 3,749
47,845 (24,197)
357
1,805 1,923 6,897
–
24,811 244
63,434
Net equity as at
14,995,743 3,749
47,845 (24,197)
357
1,805 1,923 6,897
–
24,811 244
63,434
31 December 2011
1 January 2012
Reserves reclassification
(357) (1,805)
2,162
–
(497)
497
–
Transactions with
2,942
261
3,203
CCRE Acquisition – Entity
5,296
(11,357)
(6,061)
Reclassification of gain/loss
on previous transaction with
treasury shares
treasury shares
under common control
Additional investment in
7 (35)
subsidiary interests
Personnel cost for stock options
13
Stock option exercised during
Total comprehensive income
281
44,716
for the year
31 December 2012
13
(281)
the year
Net equity as at
(28)
14,995,743 3,749
47,845 (16,456)
–
– 1,655 51,613
19,323
–
–
1
64,040
35,985 210 124,601
Notes to the consolidated
financial statements
1 General information
The structure of the Company as of 31 December 2012
Cosmo Pharmaceuticals S.p.A. with its subsidiar-
is the following:
ies Cosmo S.p.A., Cosmo Technologies Ltd., Cosmo
Research & Development S.p.A., and Cristoforo
Cosmo
Pharmaceuticals S.p.A.
Colombo Real Estate S.r.l., (“Cosmo Pharmaceuticals” or “Company” or “Group”) is a specialty pharmaceutical company: the Company’s objective is to
become a global leader in the field of optimiz-ed
therapies for selected gastrointestinal and selected
topically treated skin disorders. The Company’s
100%
Cosmo
Technologies
Ltd.
100%
Cosmo S.p.A.
99.30%
Cosmo Research
& Development
S.p.A.
100%
Cristoforo
Colombo Real
Estate S.r.l.
clinical development pipeline specifically addresses
innovative treatments for Inflammatory Bowel Diseases (IBD), colorectal cancer diagnosis and a new
2 Basis of preparation
chemical entity that is being developed for the topi-
The 2012 consolidated financial statements have
cal treatment of Acne, Alopecia and Hirsutism.
been prepared in accordance with the International
Cosmo’s proprietary multimatrix technology,
Financial Reporting Standards (the IFRS) issued by
MMX®, provides an excellent base for the develop-
the International Accounting Standards Board
ment of new, patentable, yet low-risk products,
(IASB).
manufactured at the Company’s own GMP-approved
The designation IFRS also includes all valid Inter-
plant. Currently, Cosmo, through its appointed
national Accounting Standards (IAS), as well as all
partners, has three products on the market and six
interpretations of the International Financial Report-
in clinical development.
ing Interpretations Committee (IFRIC), formerly the
Since 12 March 2007, Cosmo Pharmaceuticals’
shares have been publicly listed on the Swiss Stock
Standing Interpretations Committee (SIC).
The financial statements are prepared using the
Exchange (SIX: COPN). The Company’s stock market
historical cost convention, modified as required for
capitalization as at 31 December 2012 was equal to
the valuation of certain financial assets as well as
CHF 464,868,033.00.
on the going concern assumption. In this respect,
Headquarters and registered address are at via
Cristoforo Colombo, 1 – 20020 Lainate (Milano), Italy.
At the end of September following the Board
despite operating in a difficult economic and financial environment, the Group’s assessment is that
no material uncertainties (as defined in paragraph
resolution on 27 July 2012, the Group acquired from
25 of IAS 1) exist about its ability to continue as a
related parties Cristoforo Colombo Real Estate S.r.l.
going concern.
(“CCRE”), the real estate company which owns the
The Company presents an income statement
whole real estate property in Lainate where the
using a classification based on the function of
Group operates, inclusive of surrounding land (see
expenses (otherwise known as the “cost of sales”
note 5, “Cristoforo Colombo Real Estate S.r.l. acqui-
method), rather than based on their nature, as this
sition”).
is believed to provide information that is more relevant. The format selected is that used for managing
the business and for management reporting purposes and is consistent with international practice
in the pharmaceutical sector.
The consolidated financial statements are
expressed in thousands of Euros unless stated otherwise, rounding the amounts to the nearest thousand.
88 Cosmo Pharmaceuticals Annual Report 2012 – Notes to the consolidated financial statements
3 Changes in accounting policies
_ On 12 November 2009, the IASB issued a new
The accounting policies adopted are consistent with
standard IFRS 9 – Financial Instruments that
those of the previous financial year, as no new IFRS
was subsequently amended. The standard, hav-
or IFRIC interpretations, that became effective on
ing an effective date for mandatory adoption of
1 January 2012 are relevant for the Group’s operations.
1 January 2015 retrospectively, represents the
Standards, amendments and interpretations
effective on 1 January 2012 but not applicable
to the group
_ On 7 October 2010, the IASB issued amend-
completion of the first part of a project to replace
IAS 39 and introduces new requirements for the
classification and measurement of financial
assets and financial liabilities. The new standard uses a single approach to determine whether
ments to IFRS 7 – Financial Instruments: Dis-
a financial asset is measured at amortised cost
closures. The amendments allow users of
or fair value, replacing the many different rules
financial statements to improve their under-
in IAS 39. The approach in IFRS 9 is based on how
standing of transfers (“derecognition”) of
an entity manages its financial instruments and
financial assets, including an understanding
the contractual cash flow characteristics of the
of the possible effects of any risks that may
financial assets. The most significant effect of
remain with the entity that transferred the
the standard regarding the classification and
assets.The amendments also require additional
measurement of financial liabilities relates to
disclosures if a disproportionate amount of a
the accounting for changes in fair value attrib-
transfer transaction is undertaken at the end of
utable to changes in the credit risk of financial
a reporting period.
liabilities designated as at fair value through
_ On 20 December 2010, the IASB issued amend-
profit or loss. Under the new standard these
ments to IAS 12 – Income Taxes which clarify the
changes are recognised in Other comprehensive
accounting for deferred tax relating to invest-
income and are not subsequently reclassified to
ment properties measured at fair value. The
amendments introduce the presumption that
the Income statement.
_ On 12 May 2011, the IASB issued IFRS 10 – Con-
the carrying amount of deferred taxes relating to
solidated Financial Statements replacing SIC12
investment properties measured at fair value
– Consolidation Special Purpose Entities and
under IAS 40 will be recovered through sale. As a
parts of IAS 27 – Consolidated and Separate
result of the amendments, SIC21 Income Taxe –
Financial Statements (subsequently reissued as
Recovery of Revalued NonDepreciable Assets no
IAS 27 – Separate Financial Statements which
longer applies.
addresses the accounting treatment of invest-
Standards, amendments and interpretations to
existing standards not yet effective and not early
adopted by the Group
ments in separate financial statements). The
new standard builds on existing principles by
identifying the concept of control as the determining factor in whether an entity should be
The following standards, amendments and inter-
included within the consolidated financial
pretations to existing standards have been pub-
statements of the parent company. The stand-
lished but are not yet effective and not early adopted
ard provides additional guidance to assist in
by the Group. The Group is currently assessing any
the determination of control where this is dif-
effect that the adoption of these new standards,
ficult to assess. The standard is effective retro-
amendments and interpretations to existing stand-
spectively from 1 January 2013.
ards may have on the financial statements if they
are relevant for the Group operations.
Notes to the consolidated financial statements – Cosmo Pharmaceuticals Annual Report 2012 89
_ On 12 May 2011, the IASB issued IFRS 11 – Joint
ous version by eliminating the option to defer
Arrangements superseding IAS 31 – Interests in
the recognition of gains and losses, known as
Joint Ventures and SIC13 – Jointly controlled
the “corridor method”, and by requiring the
Entities Non monetary Contributions by Ventur-
fund’s deficit or surplus to be presented in the
ers. The new standard provides the criteria for
statement of financial position, the compo-
identifying joint arrangements by focusing on
nents of cost relating to service and net interest
the rights and obligations of the arrangement,
to be recognised in profit or loss and actuarial
rather than its legal form and requires a single
gains and losses arising from the remeasure-
method to account for interests in jointly con-
ment of assets and liabilities to be recognised in
trolled entities, the equity method. The standard
Other comprehensive income. In addition, the
is effective retrospectively from 1 January 2013.
return on assets included in net interest costs
Following the issue of the new standard, IAS 28
must now be calculated using the discount rate
– Investments in Associates has been amended
applicable to liabilities and no longer the
to include accounting for investments in jointly
expected return on the assets. The amendments
controlled entities in its scope of application
also introduce the requirement for additional
(from the effective date of the standard).
_ On 12 May 2011, the IASB issued IFRS 12 – Disclo-
disclosures to be provided in the notes. The
amended version of IAS 19 is applicable on a ret-
sure of Interests in Other Entities, a new and
rospective basis from 1 January 2013. As the Group
comprehensive standard on disclosure require-
don’t apply the “corridor method” the revised
ments for all forms of interests in other entities,
standard will not determine an increase in the
including subsidiaries, joint arrangements,
associates, special purpose vehicles and other
liability for employee benefits.
_ On 16 December 2011, the IASB issued certain
unconsolidated vehicles. The standard is effec-
amendments to IAS 32 – Financial Instruments:
tive for annual periods beginning after 1 Janu-
Presentation to clarify the application of certain
ary 2013.
_ On 12 May 2011, the IASB issued IFRS 13 – Fair
offsetting criteria for financial assets and financial liabilities in IAS 32. The amendments are
Value Measurement, clarifying the determina-
effective for annual periods beginning on or after
tion of the fair value for the purpose of the
1 January 2014 and are required to be applied ret-
financial statements and applying to all IFRSs
permitting or requiring a fair value measure-
rospectively.
_ On 16 December 2011, the IASB issued certain
ment or the presentation of disclosures based on
amendments to IFRS 7 – Financial Instruments:
fair value. The standard is effective prospec-
Disclosures. The amendments require informa-
tively from 1 January 2013.
tion about the effect or potential effect of netting
_ On 16 June 2011, the IASB issued an amendment
to IAS 1 – Presentation of Financial Statements
arrangements for financial assets and liabilities
on an entity’s financial position. Entities are
requiring companies to group together items
required to apply the amendments for annual
within Other comprehensive income that may
reporting periods beginning on or after 1 January
be reclassified to the profit or loss section of the
2013, and interim periods within those annual
income statement. The amendment is applicable
periods. The required disclosures should be pro-
for periods beginning on or after 1 July 2012.
_ On 16 June 2011, the IASB issued an amended
vided retrospectively.
version of IAS 19 – Employee Benefits. The
amendments make improvements to the previ-
4 Accounting policies
All assets and liabilities of foreign consolidated
The major accounting policies adopted are detailed
companies with a functional currency other than the
below.
euro are translated using the exchange rates in effect
Principles of consolidation
at the balance sheet date. Income and expenses are
translated at the average exchange rate for the
Subsidiaries in which the Company has direct or
period. Translation differences resulting from the
indirect controlling interest are consolidated. Con-
application of this method are classified as equity
trol is defined as the power to govern the financial
until the disposal of the investment. Average rates
and operating policies of an enterprise so as to
of exchange are used to translate the cash flows of
obtain benefits from its activities. Control is nor-
foreign subsidiaries in preparing the consolidated
mally evidenced when the Company owns, either
statement of cash flows.
directly or indirectly, more than 50% of the voting
rights or potential voting rights of a company’s
share capital that are currently exercisable. The
Property, plant and equipment are stated at cost
consolidated financial statements of Cosmo Phar-
including related expenses, less accumulated depre-
maceuticals include the accounts of Cosmo Phar-
ciation (see below) and impairment losses.
maceuticals S.p.A., Cosmo S.p.A., Cosmo Technol-
The cost of self-constructed assets includes the
ogies Ltd., Cosmo Research & Development S.p.A.
cost of materials, direct labour, the initial estimate,
and Cristoforo Colombo Real Estate S.r.l..
where relevant, of the costs of dismantling and
The consolidation commences from the date on
removing the items and restoring the site on which
which the subsidiary has been incorporated or estab-
they are located, and an appropriate proportion of
lished. For Cristoforo Colombo Real Estate S.r.l.,
production overheads.
the control was acquired at the end of September 2012
Subsequent expenditures are capitalized only if
and its accounts have been consolidated starting 1
they increase the future economic benefits embodied
October 2012. Accordingly, the consolidated financial
in the related item of property, plant and equipment.
statements include the operation of Cristoforo
All other expenditures are expensed as incurred.
Colombo Real Estate S.r.l. for the period 1 October
2012 – 31 December 2012.
The financial statements of subsidiaries are
Property, plant and equipment that are being
constructed or developed for future use are classified
as “Assets under construction” and stated at cost
combined in the consolidated financial statements
until construction is complete, at which time they
from the date that control commences until the date
are reclassified as property, plant and equipment.
that control ceases. Non-controlling interest in the
Where parts of an item of property, plant and
net assets of consolidated subsidiaries and non-con-
equipment have different useful lives, they are sepa-
trolling interest in the profit or loss of consolidated
rately identified and depreciated on the basis of
subsidiaries are presented separately from the inter-
their estimated useful lives (“component approach”).
est of the owners of the parent in the consolidated
The cost of replacing part of an item is recog-
statement of financial position and income state-
nized in the carrying amount of an item of property,
plant and equipment when that cost is incurred if
ment respectively.
Accounting policies of subsidiaries have been
it is probable that the future economic benefits
changed where necessary to ensure consistency
embodied in the item will flow to the Group and the
with the policies adopted by the Group.
cost of the item can be measured reliably. The resid-
Intercompany transactions, balances and unre-
ual carrying amount of the replaced component is
alized gains on transactions between Group compa-
recognized in the income statement as an expense.
nies have been eliminated in consolidation.
All other costs are recognized in the income state-
ment as an expense as incurred. Financial expenses
Improvements to third-party assets are classi-
related to the purchase of such assets are recognized
fied under property, plant and equipment depend-
in the income statement.
ing on the nature of the asset to which it refers.
Depreciation is recognized starting from the
The depreciation period is based on the lower of the
month in which the asset is available for use or
asset’s remaining useful life and the residual dura-
potentially able to provide the economic benefits
tion of the lease of the principal asset.
associated therewith on a systematic basis, where-
If specific events indicate that impairment of an
-by the assets are depreciated over their useful lives
item of property, plant and equipment may have
or, in the event of disposal, until their final month
taken place, the item’s recoverability is assessed by
of use.
comparing its carrying amount with its recoverable
For assets disposed of during the year, deprecia-
amount, represented by the higher of the fair value
tion is calculated for the period in which the asset
net of disposal costs and value in use, as defined in
was available for use, excluding assets purchased
the paragraph “Impairment of property, plant and
during the year.
equipment and intangible assets”.
Residual amounts, useful lives and the depreci-
Assets held under finance leases, which provide
ation methods are reviewed at the end of every
the Group with substantially all the risks and
accounting period. The depreciation rates applied to
rewards of ownership, are recognized as assets of
the items of property, plant and equipment are the
the Group at their fair value or, if lower, at the pre-
following:
sent value of the minimum lease payments. The cor-
Buildings – owned buildings
33 years
Buildings – leasehold
At the lower of the useful
improvements
life of the improvement
and the residual term of
the lease
Plant and machinery –
10 years
Plant and machinery –
8 years
Industrial and commercial
3 years
Other tangible assets – office
5 years
Other tangible assets – office
8 years
Other tangible assets –
5 years
general
specific
equipments
equipments – electronics
equipments – furniture
means of internal
transportation
Appurtenance land related to own buildings or purchased through finance leases is stated separately
and is not depreciated.
responding liability to the lessor is included in the
financial statements as financial liabilities. Leases
where the lessor retains substantially all the risks
and rewards of ownership of the assets are classified
as operating leases. Operating lease expenditures
are expensed on a straight-line basis over the lease
terms.
Business combinations and goodwill
Business combinations are accounted for using the
acquisition method of accounting. The consideration transferred in a business combination is measured at fair value at the date of acquisition. This consideration includes the cash paid plus the fair value
at the date of exchange of assets given, liabilities
incurred or assumed and equity instruments issued
by the Group. The fair value of the consideration
transferred also includes contingent consideration
arrangements at fair value. Directly attributable
acquisition-related costs are expensed in the current
period and reported within general and administration expenses. At the date of acquisition the Group
recognizes the identifiable assets acquired, the lia-
bilities assumed and any non-controlling interest
the Group will use the assets. Other intangible
in the acquired business. The identifiable assets
assets are amortized from the date they are available
acquired and the liabilities assumed are initially
for use.
recognized at fair value. Where the Group does not
Residual amounts, useful lives and the amorti-
acquire 100% ownership of the acquired business,
zation methods are reviewed at the end of every
non-controlling interests are recorded as the propor-
accounting period. The estimated useful lives are as
tion of the fair value of the acquired net assets
follows:
_ Patents and rights are amortized over their
attributable to the non-controlling interest. Goodwill is recorded as the surplus of the consideration
transferred over the Group’s interest in the fair
useful lives.
_ Trademarks and licences: trademarks are amor-
value of the acquired net assets. Any goodwill and
tized over 10 years. Licences are amortized over
fair value adjustments are recorded as assets and
the duration of the contract to which they
liabilities of the acquired business in the functional
relate.
currency of that business. Goodwill is not amor-
Expenditures on research activities, undertaken
tized, but is assessed for possible impairment at each with the prospect of gaining new technical knowreporting date and is additionally tested annually
ledge and understanding, are recognized in the
for impairment. Goodwill may also arise upon
income statements as an expense as incurred.
investments in associates, being the surplus of the
cost of investment over the Group’s share of the fair
value of the net identifiable assets. Such goodwill is
Development costs are capitalized as an intangible asset if all of the following criteria are met:
_ the technical feasibility of completing the
recorded within investments in associates. Changes
intangible asset so that it will be available for
in ownership interests in subsidiaries are accounted
use or sale;
_ the intention to complete the intangible asset
for as equity transactions if they occur after control
has already been obtained and if they do not result
in a loss of control.
Other intangible assets are recognized as assets
where it is probable that the use of the asset will generate future economic benefits and where the costs
and use or sell it;
_ the ability to use or sell the intangible asset;
_ the asset will generate probable future economic
benefits and demonstrate the existence of a
market or the usefulness of the intangible asset
if it is to be used internally;
_ the availability of adequate technical, financial
of the asset can be determined reliably. Other intan-
and other resources to complete the development
gible assets that are acquired by the Group are stated
and to use or sell it; and the ability to measure
at cost less accumulated amortization (see below)
reliably the expenditure attributable to the
and impairment losses, if any.
Subsequent expenditures on capitalized intangible assets are capitalized only when they increase
intangible asset during its development.
Following initial recognition of the development
expenditure as an intangible asset, the cost model
the future economic benefits embodied in the specific is applied requiring the intangible asset to be carassets to which they relate. All other expenditure is
ried at cost, less any accumulated amortization and
expensed as incurred.
accumulated impairment losses. The intangible
Other intangible assets with definite useful
lives are amortized on a straight-line basis over their
asset is amortized on a straight-line basis over the
period of its expected benefit, starting from the
useful lives, being the estimated period over which
date of full commercial use of the product. During
est weight to external indicators. The discounting
the period of development, the asset is tested for
rate (pretax) takes into account the risk implicit in
impairment annually.
the business sector and the financial component
If specific events indicate that impairment of
based on the timing. With the exception of losses on
an item of intangible asset may have taken place,
goodwill, impairments in value are reversed when
the item’s recoverability is assessed by comparing
there is an indication that the impairment loss may
its carrying amount with its recoverable amount.
no longer exist and there has been a change in the
The recoverable amount is the higher between
estimates used to determine the recoverable amount.
the fair value net of disposal costs and the value in
An impairment loss is reversed only to the extent that
use, as defined in the following paragraph.
the asset’s carrying amount does not exceed the car-
Impairment of property, plant and equipment
and intangible assets
The carrying amounts of the Group’s tangible and
rying amount that would have been determined, net
of depreciation or amortization, if no impairment
loss had been recognized.
intangible assets are reviewed at each balance sheet
Financial assets
date to determine whether there is any indication of
Financial assets within the scope of IAS 39 are classi-
impairment. If any such indication exists, the
fied as financial assets at fair value through profit
asset’s recoverable amount is estimated.
or loss, loans and receivables, held-to-maturity
For goodwill assets that have an indefinite use-
investments, or available-for-sale financial assets,
ful life and intangible assets that are not yet availa-
as appropriate. When financial assets are recog-
ble for use, the recoverable amount is estimated at
nized initially, they are measured at fair value, plus,
each balance sheet date.
in the case of investments not at fair value through
An impairment loss is recognized whenever the
profit or loss, directly attributable transaction costs.
carrying amount of an asset or its cash-generating
The Group determines the classification of its finan-
unit exceeds its recoverable amount. Impairment
cial assets on initial recognition and, where allowed
losses are recognized in the income statements.
The recoverable amount is the higher of an
asset’s fair value less costs to sell, if there is an active
and appropriate, re-evaluates this designation at the
end of each financial year.
All “regular way” purchases and sales of finan-
market, and its value in use. If there is no binding
cial assets are recognized on the trade date, which is
sales agreement, the fair value is estimated at the
the date that the Group commits to purchase the
amount expressed by an active market, by recent
asset.
transactions or on the basis of the best available
Regular-way purchases or sales are purchases or
information indicating the amount that the Com-
sales of financial assets that require delivery of
pany would obtain from the asset’s sale.
assets within the period generally established by
Value in use is the present value of the estimated
regulation or convention in the marketplace.
future cash flows expected to arise from the continu-
Available-for-sale financial assets are those
ing use of an asset or cash-generating unit and from
non-derivative financial assets that are designated
its disposal at the end of its useful life. The cash flows
as available for sale or are not classified in any of the
are determined on the basis of reasonable and docu-
three preceding categories. After initial measure-
mented assumptions representing the best estimate
ment, available-for-sale financial assets are meas-
of the future economic conditions that will take place
ured at fair value, at the close of business on the
over the residual useful life of the asset, giving great-
balance sheet date, with unrealized gains or losses
recognized directly in equity until the investment
value. Estimated realizable value represents the
is derecognized or determined to be impaired, at
estimated sales price in normal business, net of esti-
which time the cumulative gain or loss previously
mated costs to sell.
recorded in equity is recognized in profit or loss.
The fair values of listed investments are based
on current market prices. If the market for a finan-
Foreign currency transactions and translation of
financial statements of the foreign controlled
cial asset is not active and for unlisted securities,
companies
the Group establishes fair values by using valuation
Transactions in foreign currency are translated into
techniques. These include the use of recent arm’s-
Euros using the exchange rate ruling on the transac-
length transactions, reference to other instruments
tion date. Monetary assets and liabilities denomi-
that are substantially the same, discounted cash
nated in foreign currencies at the balance sheet date
flow analysis, and option-pricing models refined to
are translated into Euros at the foreign exchange
reflect the Company’s specific circumstances.
rate ruling at that date. Foreign exchange differ-
At each balance sheet date, the Group assesses
whether a financial asset or group of financial assets
ences arising on translation are recognized in the
income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in
is impaired.
If an available-for-sale financial asset is
a foreign currency are translated using the exchange
impaired, an amount comprising the difference
rate at the date of the transaction. Non-monetary
between its cost (net of any principal payment and
assets and liabilities denominated in foreign cur-
amortization) and its current fair value, less any
rencies that are stated at fair value are translated
impairment loss previously recognized in profit or
into Euros at foreign exchange rates ruling at the
loss, is transferred from equity to profit or loss.
dates the fair value was determined.
Inventories
Trade and other receivables and payables
Inventories are stated at the lower of acquisition or
Trade and other receivables are stated at amortized
production cost and net realizable value. Net realiz-
cost net of impairment losses. The impairment loss
able value is the estimated selling price in the ordi-
is calculated on the basis of recovery assessments by
nary course of business less the estimated costs of
analyzing each receivable considered unlikely to be
completion and selling expenses.
collected and the overall risk of non-recovery of the
The cost of inventories is determined in accord-
receivables. When the payment of the sum due is
ance with the first-in first-out (FIFO) principle
postponed beyond normal credit terms offered to
and includes expenditure incurred in acquiring the
customers, it is necessary to discount the receivable.
inventories and bringing them to their existing
Trade and other payables are measured at amor-
location and condition. In the case of manufactured
tized cost which reflects the effective interest rate
inventories and work in progress, the cost includes
in the income statement and represents the rate
an appropriate share of overhead costs that may rea-
used to discount the expected future cash flows to
sonably be attributable to the performance of manu-
the carrying value of the assets to which they relate.
facturing activities in normal operating conditions.
A provision for inventories is calculated to take
into account obsolete and slow-moving items,
They are included in current assets or liabilities,
except for maturities greater than 12 months after
the balance sheet date.
considering their possible future use and realizable
Derivative financial instruments
income statement immediately. When a hedg-
Derivative financial instruments are used for hedg-
ing instrument or hedge relationship is termi-
ing purposes, in order to reduce currency, interest
nated but the hedged transaction is still expected
rate and market price risks. In accordance with IAS
to occur, the cumulative gain or loss realized to
39, derivative financial instruments qualify for
the point of termination remains in sharehold-
hedge accounting only when at the inception of the
ers’ equity and is recognized in the income
hedge there is formal designation and documenta-
statement at the same time as the underlying
tion of the hedging relationship, the hedge is
transaction occurs. If the hedged transaction is
expected to be highly effective, its effectiveness can
no longer probable, the cumulative unrealized
be reliably measured and it is highly effective
gain or loss held in shareholders’ equity is rec-
throughout the financial reporting periods for
ognized in the income statement immediately.
which the hedge is designated.
All derivative financial instruments are measured in accordance with IAS 39 at fair value.
When derivative financial instruments qualify
Cash and cash equivalents comprises cash balances
and call deposits. Advances on invoices and bank
for hedge accounting, the following accounting
overdrafts that are repayable on demand and form
treatment applies:
_ Fair value hedge – Where a derivative financial
an integral part of the Group’s cash management
instrument is designated as a hedge of the exposure to changes in fair value of a recognized
are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
asset or liability that is attributable to a particu-
lar risk and could affect the income statement,
Interest-bearing loans and borrowings are initially
the gain or loss from re-measuring the hedging
recognized at fair value less attributable transaction
instrument at fair value is recognized in the
costs. Subsequent to initial recognition, interest-
income statement. The gain or loss on the
bearing loans and borrowings are stated at amortized
hedged item attributable to the hedged risk
cost with any difference between cost and redemp-
adjusts the carrying amount of the hedged item
tion value being recognized in the income state-
and is recognized in the income statement.
_ Cash flow hedge – Where a derivative financial
ment over the period of the borrowings on an effective interest basis. They are included in current
instrument is designated as a hedge of the
liabilities, except for maturities greater than 12
exposure to variability in future cash flows of a
months after the balance sheet date.
recognized asset or liability or a highly probable
forecasted transaction and could affect the
Employee benefits
income statement, the effective portion of any
Obligations for contributions to defined contribu-
gain or loss on the derivative financial instru-
tion pension plans are recognized as an expense in
ment is recognized directly in equity. The
the income statement as incurred.
cumulative gain or loss is removed from equity
and recognized in the income statement at the
Employee termination benefits
same time as the economic effect arising from
The employee termination benefit is considered as a
the hedged item affects income. The gain or
defined benefit plan under IAS 19. The benefits guar-
loss associated with a hedge or part of a hedge
anteed to employees, in the form of the employee
that has become ineffective is recognized in the
termination benefit paid out upon leaving the Com-
pany, are recognized in the period in which the
the initial valuation. At each balance sheet date, the
right matures. The relating liability is calculated on
Group revises its estimate of the number of options
the basis of actuarial assumptions and the benefit
that are expected to become exercisable.
vested and not yet paid out at the balance sheet
It recognizes the impact of the revision to origi-
date, applying the criteria required by the Italian
nal estimates, if any, in the income statements,
law.
with a corresponding adjustment to equity. The pro-
The discounting process is based on demo-
ceeds received net of any directly attributable trans-
graphic and financial assumptions, using the “Pro-
action costs are credited to share capital (nominal
jected Unit Credit Method” (vested benefit method)
value) and share premium when the options are exer-
applied by professional actuaries.
cised.
This method involves calculating the average
present value of the vested pension benefit on the
Provisions
basis of the employee’s service rendered to the
Provisions are recorded when:
_ the Group has an obligation, legal or construc-
measurement date, based on a projection of the
employee’s remuneration.
Actuarial gains and losses are taken to income
statements on an accrual basis in line with the
period of service necessary to earn the benefits. The
Group has decided not to use the so-called “corridor
tive, to third parties;
_ it is probable that resources will be expensed in
order to meet the obligation;
_ a reliable estimate of the amounts of the obligation can be made.
method”, which would allow it not to record the
An implied obligation is defined as an obligation
cost component calculated in accordance with the
arising when the Group has made other parties
method described represented by actuarial profits or
aware, by way of routine procedure, public company
losses, where it does not exceed 10%.
policy or a sufficiently specific announcement, that
Not applying the “corridor method”, the actu-
it accepts the obligation in a way that, as a conse-
arial gains and losses are taken to the income state-
quence, it leads the third party to believe that the
ment during the year.
Group will honor its obligation.
Forms of remuneration involving participation
Provisions for risks and charges are recognized
at an amount which represents the best estimate
in stock capital (stock option plans)
of the amount the Group will have to pay in order to
The Group grants additional benefits to the Board
settle the obligation, or otherwise transfer it to
and senior management and key employees
third parties at the end of the year.
through stock option plans. Pursuant to IFRS 2,
When the effect of the time value of money is
“Share-based payment”, these plans represent a
material and the payment dates for the obligations
form of remuneration for the beneficiaries. The cost
may be estimated reliably, the provision is calcu-
is equal to the fair value as calculated on the date
lated by discounting the estimated future financial
the option rights are granted and is recorded in the
cash flows using a pretax discount rate in order to
income statement on a straight-line basis over
reflect the current market assessments of the current
the vesting period, i.e., the date between the date
value of money and the specific risks connected to
the stock option plan was granted and the date the
the liabilities. Following discounting, the increase
rights matured. The corresponding entry is made
in the provision is recognized in the income state-
directly to shareholders’ equity. Changes in fair
ment caption “financial expenses”.
value after the grant date do not have an effect on
The provisions are updated regularly to reflect
Research government grants are recognized at
changes in cost estimates, settlement times and
their fair value at the moment in which the Group
the discount rate. Reviews of the estimate of the
issuing the grant has confirmed its approval and
provisions are recognized under the same income
the proceeds are definite; they are recognized in the
statement caption where the provision was previ-
income statement over the period necessary to
ously recognized.
match them with the costs that they are intended
Revenue and cost recognition
to compensate.
Rental income from investment property is rec-
Revenue, income, costs and charges are recorded
ognized in the income statement on a straight-line
net of discounts and allowances.
basis over the term of the lease.
Revenue from the sale of goods is recognized in
the income statement when the significant risks
and rewards of ownership have been transferred to
Interest income is accounted for based on the
effective rate of return on an accrual basis.
Payments made under operating leases are rec-
the buyer. Revenue from services rendered is recog-
ognized in income statements on a straight-line
nized in the income statement in proportion to the
basis over the term of the lease.
stage of completion of the transaction at the balance
Minimum lease payments made under finance
sheet date. The stage of completion is assessed by
leases are apportioned between the finance expense
reference to surveys of work performed. No revenue
and the reduction of the outstanding liability.
is recognized if there are significant uncertainties
Expenditures on research activities, undertaken
regarding recovery of the consideration due, associ-
with the prospect of gaining new technical know-
ated costs or the possible return of goods cannot be
ledge and understanding, as well as development
estimated reliably and there is no continuing man-
costs not capitalized, are recognized in the income
agement involvement with the goods.
statement as an expense as incurred.
Revenues from licensing contracts for non-refundable up-front fees, in situations where no fur-
Income tax
ther performance obligation exists, are recognized
The tax charge for the period is determined on the
on the earlier of when payments are received or col-
basis of prevailing laws and regulations. Taxes on
lection is assured. Up-front fees related to future
income are recognized in the income statement
performance obligations are either spread over the
except to the extent that they relate to items directly
duration of such obligations or part of the revenue
charged or credited to equity, in which case the
provisioned therefore. Where continuing signifi-
related income tax effect is recognized in equity.
cant involvement is required in the form of support,
revenues are recognized over the relevant period.
Deferred tax assets and liabilities are determined on the basis of all the temporary differences
Revenues from licensing contracts for mile-
between the carrying amount of an asset or liability
stones are recognized in the period the outcome can
in the statement of financial position and its corre-
be estimated reliably, which is in general when the
sponding tax basis. Deferred tax assets resulting
milestone is successfully achieved, which is deter-
from unused tax losses and temporary differences
mined when the funding party agrees that the
are recognized to the extent that it is probable that
required results stipulated in the agreement have
future taxable profit will be available against which
been met.
they can be utilized.
Income from royalties is recognized on an accrual
basis and represents income earned as a percentage
of product sales, in accordance with the terms of the
relevant agreement.
Current and deferred income taxes and liabili-
Earnings per share
ties are offset when there is a legally enforceable
Basic earnings per share are calculated dividing the
right to offset.
net profit (loss) attributable to the owners of ordi-
Deferred tax assets and liabilities are measured
nary shares in the Company (the numerator) by the
at the substantively enacted tax rates that are
weighted average number of ordinary shares in issue
expected to apply to taxable income in the periods
(the denominator) during the year.
in which temporary differences will be reversed.
Diluted earnings per share is calculated by
adjusting the net profit (loss) attributable to owners
of ordinary shares and the weighted average number
of ordinary shares during the year to take account of
all potential ordinary shares with a diluting effect.
A potential ordinary share is a financial instrument
(TUIR).
or other contract that could give its owner the right
Cosmo Pharmaceuticals S.p.A. acts as the consol- to obtain ordinary shares.
idating company in this program and calculates a
single taxable base for the group of companies taking
Segment reporting
part, thereby enabling benefits to be realized from
The Management has identified only one business
the offsetting of taxable income and tax losses in a
segment, which is the pharmaceutical segment.
single tax return. Each company participating in the
Indeed, the Management did not identify other
consolidation transfers its taxable income or tax loss
operating segments to which specific and different
to the consolidating company. Cosmo Pharmaceuti-
risks and benefits can be related to and the Manage-
cals S.p.A. recognizes receivables from companies
ment’s reports to support the decision process are
contributing taxable incomes, corresponding to the
regularly and consistently prepared.
amount of IRES (corporate income tax) paid on its
Moreover, the Management did not believe that
behalf. In the case of a company bringing a tax loss
costs of investments could be reasonably allocated
into the consolidation, Cosmo Pharmaceuticals
unless through an arbitrary allocation which would
S.p.A. recognizes a payable to that company for the
not provide a better disclosure than that provided by
amount of the loss actually set off at a group level.
the pharmaceutical sector considered as a whole.
In particular, under the Group’s current organi-
Treasury shares
zational structure most of the investments made and
Treasury shares are presented as a deduction from
costs incurred by the Group while performing its pro-
equity. The purchase cost of treasury shares and the
duction activities cannot be allocated to a specific
sales proceeds of any subsequent sale are presented
geographical area or to a specific customer segment,
as movements in equity.
or to the production of specific products. Therefore,
the Management believes that, to date, segment
Dividends
reporting by either geographical area or products or
Dividends payable are reported as a movement in
customers would not improve the understanding of
equity in the period in which they are approved by
the Group results or the presentation of risks and
shareholders.
profitability.
Critical accounting estimates, assumptions
The Management takes the volatility and the
and judgments
market environment (if applicable) of the specific
The preparation of the consolidated financial state-
asset into account when assessing the significance
ments and the related notes requires the use of esti-
of the asset’s reduction in fair value.
mates and assumptions that affect the application
Financial assets available for sale for which the
of accounting policies and the reported amount of
reduction in fair value is more than 30% of the initial
assets, liabilities, income and expenses. However,
measurement and for which the reduction is
as they are estimates, actual future results could dif- observed for a continuous period of 12 or more confer from those included in the consolidated financial secutive months are usually tested for impairment.
statements. Such estimates and assumptions are
based on accumulated experience and on other fac-
Deferred tax assets
tors deemed to be appropriate in the calculation of
The Group has a considerable amount of tax losses
the carrying amounts of assets and liabilities that
carried forward and temporary differences between
cannot be measured on the basis of other sources.
carrying amount of assets and liabilities for finan-
Revisions to accounting estimates are recognized in
cial reporting purposes and for taxation purposes
the period in which the estimate is revised and any
that allow for the recognition of deferred tax assets.
future period affected.
Deferred tax assets are recognized only to the extent
Accounting estimates that require the more
that it is probable that future taxable profits will be
subjective judgment of the Management in making
available against which the asset can be utilized,
assumptions or estimates regarding the effects of
determined on the basis of future results forecasts.
matters that are inherently uncertain and for which
changes in conditions may significantly affect the
Share-based compensation expenses
results reported in the consolidated financial state-
The Group has granted stock options to some of its
ments, are reported below.
employees and Directors. Since there is no market
Impairment of property, plant and equipment,
goodwill, other intangible assets and financial
assets
The Management reviewed the carrying amount of
for trading stock options, the Management must
use a fair value method to value the stock options.
Fair value methods require the Management to
make several assumptions, the most significant of
which are the selection of a fair value model, stock
property, plant and equipment, goodwill, other
price volatility and the average life of an option. The
intangible assets and financial assets at balance
fair value of the stock options is determined sepa-
sheet date to determine whether there was any indi-
rately by an external appraiser. Estimates have been
cation of impairment and determined that such an
based on Company history or market data where
indication did not exist.
appropriate. There is no certainty that the results of
For financial assets available for sale the Man-
a fair value method would be the value at which the
agement concludes that an available-for-sale finan-
stock options would be traded for cash. Should dif-
cial asset is impaired if its fair value falls either sig-
ferent assumptions be used, the expenditure recog-
nificantly or for a prolonged period below its cost,
nized could be different. Additional information is
less any impairment loss previously recognized in
reported in “Accounting policies – Employee bene-
profit or loss.
fits – Forms of remuneration involving participation
in stock capital (stock option plans)”.
Development costs
5 Cristoforo Colombo Real Estate S.r.l.
Development costs are capitalized in accordance
acquisition
with the accounting policy detailed in “Other intan-
The Company’s manufacturing facilities, office
gible assets”.
building and the surrounding real estate belonged
Based on facts and circumstances of the project
to Cristoforo Colombo Real Estate S.r.l., a related
Budesonide MMX®, the Management has deter-
party which leased them to the Company (see note
mined that the capitalization criteria were fulfilled
31, “Related parties transactions”).
at the start of the clinical phase III in 2008. At that
With high growth in the existing product base
stage, there was a statistical probability of success
and a rapidly developing product pipeline that would
varying from 66% to 75% for new chemical entities.
require additional investments in manufacturing
The Management believes that it is higher for this
capacity, the board of the Company felt it prudent to
project, as budesonide is a well-known molecule,
get total control of the manufacturing site. In July
that has been used in the market for many years,
2012 CCRE was thus approached with the objective of
although in different therapeutic areas. The Group
purchasing the company.
is bearing phase III costs of the European clinical
trial until product registration.
In May 2011 the Company filed the MAA (Marketing Authorization Approval) for Budesonide
This is related-party transaction, where the
counterparts of the Company are also shareholders
and partly also directors of the Company.
In order to ensure that the transaction took place
MMX® in 15 EU countries with the Dutch Regulatory
at “arm’s length”, the management appointed
Authority acting as reference member state. Ferring
two independent advisors to prepare two appraisals
S.A., the worldwide licensee (except of the US and
estimating the value of the property compendium.
Japan) has announced that upon approval, the prod-
Because the property compendium is also being
uct would be marketed under the Cortiment™
acquired under property leasing contracts it became
brand name. On 9 August 2012 the Dutch Regulatory
necessary to discount the outstanding debt. At the
Agency (“MEB”) announced that they declined
end, the consideration for the acquisition of the
approving Cortiment™ on the basis of lacking clini-
entire CCRE capital stock, was determined at EUR
cal relevance. The Company filed a Note of Objection
13,144 thousand considering the average of the value
which was heard on 21 December 2012 and the MEB
estimates of the property compendium, after deduct-
then on 31 January 2013 decided to grant the market-
ing total debt (explicit and implicit).
ing authorization to Cortiment™ in The Netherlands.
The consideration for the acquisition was paid
The process of getting the approval in other EU coun-
partially in cash (EUR 7,208 thousand) and partially
tries is currently ongoing.
in Cosmo Pharmaceuticals S.p.A. ordinary shares
The development project is therefore progressing
in line with the technical and economical plan and
(319.823 determined on the basis of the closing price
as at 19 July 2012, plus a 10% discount hence at a price
after review, the Management confirms the recover- of CHF 22.27 corresponding to EUR 18.56 at the
ability of the relevant capitalized costs, based on the
exchange rate resulting on the same date).
probable future economic benefits.
The acquisition was completed on 26 September
EUR 1,000
2012; for this reason, in the preparation of Cosmo
Assets
Pharmaceuticals’ consolidated financial state-
Non-current assets
ments as at 31 December 2012, the assets and liabili-
ties of the subsidiary are consolidated line by line in
Deferred tax assets
the “Consolidated statement of financial position”,
while the “Consolidated income statement”
includes the new subsidiary’s figures starting from
1 October 2012.
As regards the method of accounting CCRE
acquisition, it has been treated under IFRS as an
operation “under common control”, i.e. as an operation carried out by two entities that are subject to
the control of the same controlling shareholders.
Such operations are not expressly regulated by IFRS
3, which explain the method to be used to account
for business combination, nor by other IAS/IFRS.
In the absence of a specific accounting principle to
refer to, the Group following the guide lines of IAS 8,
has adopted as the accounting treatment of such
operation that of booking the entity acquired in
the consolidated balance sheet on the basis of the
accounting balances shown in the financial statements prior to the operation, in other word, ensuring “continuity of values”.
The assets and liabilities of CCRE acquired as at
30 September 2012, the consideration paid and the
net cash flow due to the acquisition, are detailed
here as follows:
16,060
597
16,657
Current assets
Other receivables and other assets
140
809
949
Total assets
17,606
Liabilities
9,861
1,037
Other non-current financial liabilities
2,293
13,191
Current liabilities
Trade payables
Total liabilities
Net assets
917
22
26
2,303
3,268
16,459
1,147
Consideration
Cash paid
Fair value own shares
Total consideration
7,208
7,084
14,292
Net cash flow due to acquisition
Cash paid
Cash and cash equivalents acquired
Total net cash flow due to acquisition
(7,208)
809
(6,399)
Part of the consideration paid in own shares, has
delivered 206.54 million tablets at a production rev-
been accounted considering 319,823 own shares
enue of EUR 14,581 thousand (in 2011, 148.21 million
measured at the fair value of CHF 26.80 or EUR 22.15
tablets, EUR 10,788 thousand); the revenue increased
(closing price and Fx CHF/EUR as at 30 September
by 35.2%, less than the increase of 39.4% in the num-
2012, date of acquisition) for a total of EUR 7,084
ber of tablets. This was due to the different product
thousand.
mix (bulk or packaged product) and to the contractu-
In the consolidation process, due to the recognition of CCRE accounting balances, the difference
between the total consideration paid (EUR 14,292
ally foreseen reduction in the price per tablet manufactured.
The item “manufacturing of MMX® products”
thousand) and the net assets (EUR 1,147 thousand),
also include EUR 93 thousand for the 1.2 million
net of the gain arising from the owns share trans-
Budesonide tablets delivered to Santarus at the base
ferred as payment (EUR 1,788 thousand), amounting
supply price as per the supply agreement.
to EUR 11,357 thousand, has been recorded directly
in the equity as a reduction in the retained earnings.
Revenue from “Related services” decreased by
27.6% to EUR 517 thousand due to reduction in services related to contract manufacturing.
6 Revenue
In March 2012, the Company signed a license
Revenue can be split as follows:
agreement with Medicis granting exclusive world-
EUR 1,000
2012
2011
investigational anti-androgen drug targeted on cerment provided for the payment of USD 25 million up-
third parties:
products and specialty
zation of Cosmo’s new chemical entity CB-03-01, an
tain topical skin applications. The license agree-
Manufacturing on behalf of
Manufacturing of generic
wide rights for the development and commerciali-
10,617
10,953
front, regulatory and commercial milestones and
royalties on sales averaging those of other com-
drugs
Manufacturing of MMX®
mercial transactions. The USD 25 million up-front
14,674
10,788
Related services
517
714
Other revenues from sales
145
248
Licence fees, up-front fees
21,910
763
Royalties
11,674
10,043
February 2012 upon the FDA acceptance for review
Total revenue
59,537
33,509
of the NDA for Uceris™ (Budesonide MMX®) tablets.
products
and milestones
Revenue from “Manufacturing of generic products
payment equal to EUR 18,718 thousand included in
“License fees, up-front fees and milestones”, was
cashed, net of 8% withholding tax, on 11 April 2012.
“License fees, up-front fees and milestones”
also include USD 4 million, or EUR 3,040 thousand,
for the milestone that became due from Santarus in
Cosmo elected to take payment of USD 4.0 million
in shares and got 906,412 newly issued shares of
and specialty drugs” decreased by EUR 336 thousand
Santarus common stock, increasing the Company’s
or 3.1% to EUR 10,617 thousand mainly due to slight
total position in Santarus to 7,878,544 shares.
variations in generics orders.
The item “Manufacturing of MMX® products”
Revenue from “Royalties” in 2012 includes EUR
11,626 thousand relating to the royalties on Lialda®/
mainly relates to manufacturing of Shire’s Lialda®/
Mezavant®/Mesavancol® sales (the item amounted
Mezavant® and of Giuliani’s Mesavancol®: Cosmo
to EUR 10,009 thousand in 2011); it also includes
continues being the sole manufacturer of Lialda®/
EUR 48 thousand for royalties on two products (a
Mezavant®/Mesavancol® and during 2012 Cosmo
generic and a food supplement).
7 Net operating expenses
EUR 1,000
Net operating expenses presented in the income
statements by function are detailed and commented
by nature below:
EUR 1,000
2012
2011
70
756
338
281
Changes in inventories of
finished goods and work in
Raw materials and consum-
(5,997)
(5,488)
Personnel expenses
(8,937)
(8,141)
clinical trial costs
(6,485)
(2,088)
(9,529)
(7,701)
Depreciation and
(2,542)
(2,220)
(33,082)
(24,601)
amortization
(61)
177
399
104
Total change in inventories
338
281
work in progress (wip)
of finished goods and wip
work in progress was primarily due to the increase
in work in progress of MMX® products.
The item “Raw materials and consumables used”
comprises the following:
EUR 1,000
2012
2011
4,902
4,550
Purchase of consumables
408
536
Purchase of laboratory
430
422
130
63
Purchase of safety
88
77
Purchase of wrapping and
55
98
6,013
5,746
(16)
(258)
5,997
5,488
Purchase of raw materials
and packaging
Other income
“Other income” comprises the following:
EUR 1,000
2011
The change in inventories of finished goods and
progress
Outsourced preclinical and
2012
finished goods
Other income
ables used
supplies and materials for
Lease of offices
Tax credit
2012
2011
6
8
–
473
Other
64
275
Total other income
70
756
The item “Other income” in 2011 comprises EUR 473
thousand for “Tax credit” granted by the Italian
government in March 2011 on research and development activities conducted in the period 2008 and
previously not financed due to insufficient State
funds.
Changes in inventories of finished goods
and work in progress
The item comprises the following:
clinical trial
Purchase of maintenance
materials
materials
crate
Total purchases
Changes in raw materials
inventories
Total raw materials and
consumables used
Raw materials in the pharmaceutical industry are
mainly referred to as the active pharmaceutical
ingredient (API) of the product, which is the most
significant cost item of material consumption,
mainly when the production is related to generic
products, while for the production of branded speciality drugs it is generally provided by the commis-
sioning company in account for manufacturing as
The numbers by category of the entire staff as at 31
part of the working contract; other raw materials
December 2012 and 2011 are the following:
are the excipients and the packaging materials.
The increase in the cost for raw materials and
No. of people
2012
2011
14
14
9
9
Employees
64
66
Workers
73
70
160
159
packaging, net of the changes in raw materials
inventories, has to be put in relation to the increase
Managers
and in the different mix in the revenue from manu-
Junior managers
facturing on behalf of third parties.
Personnel expenses
Total number
This item, which includes the cost of the entire
staff, comprises the following:
Preclinical and clinical trials costs outsourced to
EUR 1,000
2012
2011
Salaries and wages
6,748
6,188
Social security contributions
1,712
1,519
358
309
13
–
106
125
8,937
8,141
Employee benefits
Stock options
Other costs
Total personnel expenses
subcontractors and expensed in the income statement in 2012 and 2011 mainly refer to CB-03-01 and
to CB-17-01: they increased from EUR 2,088 thousand to EUR 6,485 thousand mainly due to phase II
on CB-03-01 for Acne and phase II b trials which were
conducted for CB-17-01.
In 2008 Budesonide MMX® entered phase III
development and for this reason the outsourced
clinical trial costs relating to this project for the EU
Personnel expenses increased by 9.8% in 2012 com-
were capitalized (see note 13, “Other intangible
pared to 2011: the increase is closely related to the
assets”).
Following the strategic collaboration agreement
increase in the entire staff.
In 2012 the expense for the value of employees’
signed in December 2008, Santarus is reimbursing
and Directors’ services exchanged for stock options
the Company all costs for phase III clinical studies on
amounted to EUR 13 thousand and refer to the cost
Budesonide MMX® that Cosmo is incurring in the US
accounted in relation to the 15,264 options granted
(in 2012 and 2011, those amounted to EUR 41 thousand
by the board on 22 March 2012 (in 2011 no costs for
and to EUR 1,092 thousand respectively).
stock options) (see note 29, “Share-based payments”).
The average numbers of the entire staff for the
years ended 31 December 2012 and 2011 are the following:
No. of people
Managers
Junior managers
Employees
Workers
Total average number
“Other operating expenses” comprises the following:
EUR 1,000
2012
2011
14.0
14.0
9.0
9.0
65.0
62.0
71.5
63.5
159.5
148.5
2012
2011
Service costs
7,278
5,004
Operating lease expenses
1,585
1,993
Other operating costs
666
704
Total other operating
9,529
7,701
expenses
“Service costs” mainly comprises costs for profes-
“Operating lease expenses” are detailed as follows:
sional and consultancy services (i.e., scientific,
commercial and administrative services), utilities
EUR 1,000
(gas, electricity, water), maintenance services and
third-party manufacturing, in 2012 it also includes
Rent
EUR 500 thousand as second licence fee to use a pat-
Other rentals
ented API in Cosmo project CB-17-01. “Service costs”
is detailed as follows:
EUR 1,000
Total operating lease
expenses
2012
2011
1,201
1,543
384
450
1,585
1,993
The decrease in operating lease expenses is due to
2012
2011
1,022
750
Patent costs
150
100
Licence fee
500
–
Maintenance
946
773
Investor relations and web
234
241
to EUR 1,499 thousand) (see note 31, “Related par-
Technical assistance
152
124
In 2012 “Rent” also includes EUR 31 thousand and
Utilities, electrical power
817
659
Utilities, gas and heating
321
270
Utilities, water
34
39
Waste disposal
78
51
Premises cleaning
93
83
146
146
82
88
Insurance
163
152
Non executive directors
180
217
Board of statutory auditors
73
73
Auditing
95
88
Advertising and marketing
81
82
Freight and customs
93
55
Travel expenses
713
355
Sub-contracting and other
470
437
835
221
7,278
5,004
External consultancy
services
site maintenance
Receptionist and security
services
Utilities, telephone,
internet
costs
services in relation to the
CCRE acquisition at the end of September 2012, the
real estate company which owns the whole real
estate property in Lainate where the Group operates.
In 2012 “Rent” includes the cost until 30 September for the rent of the Lainate complex, equal to
EUR 1,156 thousand (for the entire 2011 it was equal
ties transactions – Lease agreement for Lainate”).
EUR 14 thousand respectively for the annual rent of
the Dublin office and the rent of a laboratory for
preclinical activities in Catania, Italy (in 2011 EUR
31 thousand and EUR 13 thousand respectively).
“Other rentals” in 2012 includes the amount of
EUR 231 thousand, for the rent of the equipment of
the MMX® products plant, such as HVAC, electrical
and mechanical, purified water equipment, etc.
until the CCRE acquisition at 30 September 2012 (for
the entire 2011 it was equal to EUR 308 thousand)
(see note 31, “Related parties transactions – Lease
agreement for Lainate”). It also includes the rent of
the telephone exchange system, photocopy
machines and cars.
“Other operating costs” are detailed as follows:
manufacturing
Other costs
Total service costs
EUR 1,000
2012
2011
318
316
Donation
30
45
Stationery
34
36
Newspapers and magazines
13
17
Fuel and Oil
45
34
134
19
Club memberships
26
25
Postal costs
35
47
Other costs
31
165
666
704
Representation expenses
Tax, other than income tax
Total other operating costs
2012
plant and equipment
Amortization of other
intangible assets
Total depreciation and
amortization
EUR 1,000
2011
1,782
1,538
760
682
2,542
2,220
2012
2011
Other
1,012
1,032
Total financial income
1,012
1,032
1
–
Interests on medium and
73
83
Interests on financial
44
1
Other
461
763
Total financial expenses
579
847
Financial income
433
185
Financial income
Financial expenses
Interests on bank overdraft/
advance on invoices
lease payables
Depreciation of property,
long term bank loan
EUR 1,000
8 Financial income/expenses
(expense), net
Financial income in 2012 mainly includes EUR 277
thousand due to the interest received on cash and
cash equivalents (EUR 182 thousand in 2011), interest received on corporate bonds and securities for
EUR 19 thousand (EUR 29 thousand in 2011), foreign
exchange differences for EUR 349 thousand (EUR
390 thousand in 2011), foreign exchange differences on forward currency contracts for EUR 312
thousand (EUR 396 thousand in 2011).
Interest expenses on medium- and long-term
bank loans in 2012 include also EUR 50 thousand
arising from the application of the amortized costs
to the subsidized loans (EUR 64 thousand in 2011).
Other financial expenses include foreign
exchange differences and other bank and financial
expenses. In 2011 they also include EUR 391 thousand for interest, accounted to adjust the redemption amount of the obligation for the Company to
purchase its own equity instruments for cash due to
the put options issued in connection with the BioXell
business combination (see note 28, “Other current
financial-liabilities”).
9 Income tax expenses
EUR 1,000
EUR 1,000
Income tax I.R.E.S. and
other corporation taxes
2012
2011
6,753
1,957
Income tax I.R.A.P.
971
287
Current income tax
7,724
2,244
89
249
(249)
(1,006)
Deferred tax
(160)
(757)
7,564
1,487
Deferred tax assets
Total income tax expenses
Current income tax includes IRAP, which represents
an Italian regional tax applied at a rate equal to 3.9%
and levied on profit (loss) before tax, plus personnel
costs and net financial charges which are not considered tax-deductible, as well as IRES, which represents the Italian corporate income tax applied at a
rate equal to 27.5%, and the Irish corporation tax
applied at a rate equal to 12.5% to the taxable income
of Cosmo Technologies Ltd.
(TUIR).
For details on deferred tax see notes 15 and 25.
The reconciliation between theoretical income
taxes determined on the basis of the tax rates applicable in Italy and the income taxes (current and
deferred) reported in the consolidated financial
Profit before taxes
2012
2011
26,888
9,093
IRES tax rate
27.5%
27.5%
IRES theoretical income taxes
7,394
2,501
Operating income for IRAP
19,133
1,544
Personnel costs not deduct-
7,166
6,465
26,299
8,009
IRAP tax rate
3.90%
3.90%
IRAP theoretical income taxes
1,026
312
Total theoretical income taxes
8,420
2,813
29
55
(1,025)
(907)
(71)
(467)
248
–
4
–
(41)
(7)
7,564
1,487
tax basis a
ible for IRAP a
IRAP tax basis
Tax effect of permanent
differences b
Effect of different corporate
tax rate in the Irish
subsidiary c
Reversal of unrecongised
defered tax on loss carry
forward d
Tax on treasury shares gain
directly recognized in equity e
Theoretical tax effect on permanent difference for stock
option costs
Theoretical tax effect on
permanent difference for consolidation adjustments
Current and deferred income
tax recognized in the consolidated financial statements
a
Operating income and personnel costs of the Italian companies
relevant for IRAP.
b
It mainly include non-deductable costs for entertainment expenses
and company cars, deductable personnel costs for IRAP and theoreti-
statements for the year ended 31 December 2012 and
2011 is as follows:
cal tax benefit on losses for IRAP not recoverable.
c
Different applicable tax rate for the foreign subsidiary.
d
Tax benefit for loss carryforward for which no deferred tax recognised
in previous year.
e
Applicable tax rate of 27.5% on gain on sell of treasury shares.
As at 31 December 2012 and 2011, the total income tax
was EUR 7,564 thousand and EUR 1,487 thousand
respectively (for details see also notes 15 and 25).
Theoretical income taxes are calculated by applying the IRES tax rate (27.5%) to the result before tax,
and the IRAP (an Italian regional tax) tax rate (3.90%)
to the operating income plus personnel cost for the
Italian companies.
As at 31 December 2012 the Italian companies of the
Group had tax loss carry-forward of approximately
EUR 66,991 thousand for which no deferred tax
assets were accounted. Tax loss carry-forward generated gross deferred tax assets of EUR 18,422 thousand
using the Italian income tax rate (27.5%).
According to the amended article 84 of the Italian TUIR, the time limit of 5 years provided for the
purpose of loss carried forward has been eliminated,
so the losses can be carried forward indefinitely, but
a quantitative limit for the use of tax losses is introduced, up to 80% of the income realized in the subsequent years. The quantitative limit of 80% does not
apply to losses that arose in the first three years from
the establishment of the Company. These new provisions are applicable starting from 2011.
A summary of tax losses incurred since inception and the related gross and net deferred tax assets
is provided in the table below:
Tax losses
EUR 1,000
Carryforward
%
Deferred tax
assets
Created in first 3 year from the
11,186
27.50%
3,076
Created in the following years
55,805
27.50%
15,346
establishment
66,991
Quantitative
limit
80% of income in
subsequent years
100% of income in
subsequent years
18,422
The above deferred tax asset has not been recognized
in the consolidated financial statements due to
uncertainties concerning the future taxable profits
against which such an asset may be offset.
10 Basic and diluted earnings per share
Basic earnings per share are calculated by dividing
the net profit (loss) for the year attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year.
2011
19,323
7,599
13,700,210
14,436,176
73,794
–
13,774,004
14,436,176
1.403
0.526
Net profit attributable to
shareholders (in EUR 1,000)
Weighted average
Basic earnings per share are as follows:
2012
number of outstanding
ordinary shares
Net profit attributable to
shareholders (in EUR 1,000)
Weighted average number of
outstanding ordinary shares
Basic earnings per share
(in EUR)
2012
2011
19,323
7,599
13,700,210
14,436,176
1.410
0.526
Incremental shares
from assumed options
exercise
Adjusted weighted aver-
age number of outstanding
ordinary shares
Diluted earnings per share
(in EUR)
Diluted earnings per share are calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year, plus
the weighted average number of potential ordinary
shares.
With reference to the stock option plans, the
potential number of ordinary shares is represented by
the shares that would be issued as a consequence of
the conversion of all options into ordinary shares;
regarding the stock option plan set up in December
2007, as the weighted average market price in 2012
was higher than exercise price, the potential shares
are included in the calculation of diluted earnings
per share for 2012 starting from 1 January 2012.
11 Property, plant and equipment
The composition and variation of “property, plant
and equipment” are shown in the following tables:
Land and
EUR 1,000
Plant and
buildings
Industrial
machinery
Other fixed
and
commercial
assets
Assets
Total
under construction
equipment
and pay-
ments on
Cost
account
Balance at 1 January 2012
–
12,013
1,682
1,929
107
15,731
Additions
–
1,755
196
105
10
2,066
Other movements
–
(35)
(11)
(51)
–
(97)
Construction completed
–
–
–
–
–
–
Cristoforo Colombo Real
17,799
1,599
–
–
–
19,398
–
(2)
–
(12)
(117)
(131)
17,799
15,330
1,867
1,971
–
36,967
–
6,977
1,526
1,227
–
9,730
99
1,339
139
205
–
1,782
–
(35)
(11)
(51)
–
(97)
2,325
1,013
–
–
–
3,338
–
(2)
–
(12)
–
(14)
2,424
9,292
1,654
1,369
–
14,739
15,375
6,038
213
602
–
22,228
Estate S.r.l. acquisition
Disposals
Balance at
31 December 2012
Accumulated depreciation
Depreciation charge for the
year
Other movements
Cristoforo Colombo Real
Estate S.r.l. acquisition
Disposals
Balance at
31 December 2012
Net book value as at
31 December 2012
EUR 1,000
Land and
Plant and
buildings
Industrial
machinery
Other fixed
and
commercial
assets
Assets
Total
under construction
equipment
and pay-
ments on
Cost
account
–
11,402
1,542
1,706
–
14,650
Additions
–
274
140
186
507
1,107
–
337
–
63
(400)
–
Disposals
–
–
–
(26)
–
(26)
Balance at
–
12,013
1,682
1,929
107
15,731
–
5,744
1,417
1,045
–
8,206
Depreciation charge for the
–
1,233
109
196
–
1,538
Disposals
–
–
–
(14)
–
(14)
Balance at
–
6,977
1,526
1,227
–
9,730
Net book value as at
–
5,036
156
702
107
6,001
31 December 2011
Accumulated depreciation
year
31 December 2011
31 December 2011
“Land and buildings”, acquired in the CCRE acquisition (see note 5” Cristoforo Colombo Real Estate
S.r.l. acquisition”), refers to the book value of the
whole real estate property in Lainate (industrial
plant, laboratories and offices) where the Group
operates, inclusive of surrounding land: land
related to the buildings, which totals EUR 4,600
thousand, is not subject to depreciation.
The acquisition of the entire real estate property
is being made through two finance leasing agreements.
“Plant and machinery” mainly relates to the cost of
12 Goodwill
acquisition of machinery and production facilities
The item “Goodwill” is detailed as follows:
for the manufacturing business of pharmaceutical
products; the increase in 2012 refers to the invest-
EUR 1,000
As at 31 December
ment in plant and machinery for production capac-
2012
2011
109
109
ity addition, mainly in relation to the production
of the Budesonide MMX® tablets; the increase is
Opening carrying amount
also due to the acquisition of the equipment of the
Additions for the year
–
–
MMX® products plant (HVAC, electrical and
Write-downs/revaluations
–
–
109
109
mechanical, purified water equipment) acquired
with the acquisition of CCRE. The total historical
for the year
Closing carrying amount
cost includes EUR 6,972 thousand as plant and
machinery acquired through finance lease agree-
“Goodwill” relates to the acquisition in 1997 from
ments.
Parke Davis of the manufacturing business of phar-
“Industrial and commercial equipment” relates
maceutical products.
The goodwill has been tested for impairment.
to the investment in the modernization of laboratory equipment which occurred throughout the
The recoverable amount is determined based on
years. Of the laboratory equipment historical costs,
value-in-use calculations. These calculations use
approximately EUR 341 thousand were acquired by
cash flow projections based on financial plans
way of finance lease agreements.
approved by the Management covering a 3-year
“Other fixed assets” increased in 2012 and 2011,
period. Cash flows beyond the 3-year period are
in relation to the investments (i) in fittings and fur-
extrapolated using the estimated growth rates
niture for the new laboratories, (ii) in computers
stated below.
and servers and (iii) in lift and pallet trucks for
Key assumptions for the goodwill positions include:
plant and warehouse. Approximately EUR 64 thousand of total historical costs refer to other fixed
assets acquired by way of finance lease agreements.
Terminal growth rate1
Weighted average cost of capital (WACC)2
0.0%
8.76%
1
Used for calculating the terminal value: prudently considered 0%
2
Pretax discount rate applied to the cash flow projections
In making cash flow projections, the Management
determined gross margins based on past performance and its expectations of market developments.
The growth rates used are consistent with the
forecasts, and the levered WACC used is pretax.
Based on the impairment test conducted, no impairments were recognized in 2012.
13 Other intangible assets
The composition and variation of “Other intangible
assets” are shown in the following table:
EUR 1,000
Patents
and rights
Trade-
Develop-
marks and
ment costs
licences
construcpayments
on account
8,658
20
16,345
46
25,069
466
–
465
12
943
46
–
–
(46)
–
9,170
20
16,810
12
26,012
3,081
19
–
–
3,100
Additions
Balance at 31 December 2012
Total
under
tion and
Cost
Assets
Accumulated amortization
Amortization charge for the year
760
–
–
–
760
3,841
19
–
–
3,860
Net book value as at 31 December 2012
5,329
1
16,810
12
22,152
EUR 1,000
Patents
and rights
Trade-
Develop-
marks and
ment costs
licences
Total
under
construction and
payments
Cost
Assets
on account
8,140
20
14,459
186
22,805
Additions
188
–
330
–
1,886
190
2,264
–
(330)
–
8,658
20
16,345
46
25,069
2,400
18
–
–
2,418
681
1
–
–
682
3,081
19
–
–
3,100
Net book value as at 31 December 2011
5,577
1
16,345
46
21,969
Accumulated amortization
Amortization charge for the year
“Patents and rights” mainly refers to the costs for
The asset is not amortized as the amortization
filing and extension of patents owned by the Group.
will start from the date of full commercial use of the
It also include the 2011 investment for the imple-
product on a straight-line basis over the period of its
mentation of the new ERP.
expected benefit.
“Development costs” refers to the Budesonide
MMX® project: based on facts and circumstances of
14 Financial assets
the project Budesonide MMX®, the Management
The item is detailed as follows:
has determined that the capitalization criteria were
fulfilled at the start of the clinical phase III in 2008.
EUR 1,000
At that stage, there was a statistical probability of
success varying from 66% to 75% for new chemical
entities. The Management believes that it is higher
for this project, as budesonide is a well-known molecule, that has been used in the market for many
years, although in different therapeutic areas. The
Financial assets available
for sale- Santarus shares
Other financial assets
available for sale
Financial assets
As at 31 December
2012
2011
65,565
17,836
505
468
66,070
18,304
Group is bearing phase III costs of the European
clinical trial until product registration.
In May 2011 the Company filed the MAA (Mar-
“Financial assets available for sale” refers for EUR
65,565 thousand to the investment in shares of
keting Authorization Approval) for Budesonide
Santarus (NASDAQ: SNTS) according to the strate-
MMX® in 15 EU countries with the Dutch Regulatory
gic collaboration agreement signed with Santarus
Authority acting as reference member state. Fer-
in December 2008 for the exclusive rights to
ring, the worldwide licensee (except of the US and
develop and commercialize Budesonide MMX® and
Japan) has announced that upon approval, the
Rifamycin SV MMX® in the US market. In addition
product would be marketed under the Cortiment™
to the 6,972,132 Santarus share owned at the end of
brand name. On 9 August 2012 the MEB announced
2011, in February 2012, upon the acceptance for
that they declined approving Cortiment™ on the
review of the NDA for Uceris™ (Budesonide MMX®)
basis of lacking clinical relevance. The Company
tablets, Cosmo elected to take payment of USD
filed a Note of Objection which was heard on 21
4.0 million in shares and got 906,412 newly issued
December 2012 and the MEB then on 31 January 2013
shares of Santarus common stock, increasing the
decided to grant the marketing authorization to
Company’s total position in Santarus to 7,878,544
Cortiment™ in The Netherlands. The process of
shares.
getting the approval in other EU countries is cur-
As at 31 December 2012 the fair value of the share
(market price NASDAQ) was equal to USD 10.98, for
rently ongoing.
The development project is therefore progressing
a total of USD 86,506 thousand (corresponding to
in line with the technical and economical plan and
EUR 65,565 thousand, at 31 December 2012 USD/EUR
after review, the Management confirms the recover-
exchange rate). The gain of EUR 44,689 thousand
ability of the relevant capitalized costs, based on the
was recognized in the “comprehensive income”
probable future economic benefits.
without any deferred tax effects due to the partici-
The capitalized costs include outsourced clinical
trial costs (more than 90% of the amount capital-
pation exemption.
Financial assets as at 31 December 2012 also
ized), material (API, excipients) for the preparation
includes EUR 505 thousand as corporate bonds: the
of clinical batches and personnel expenses directly
gain of EUR 37 arising from the adjustment to the
related to the Budesonide MMX® project.
fair value, was recognized in the “comprehensive
income”.
15 Deferred tax assets
The caption changed as follows:
Changes during
others
Losses carried forward
Patents
Gain on assignment of
enterprise
Development costs
Fair value financial investment available for sale
IPO costs and capital increase costs
As at
Directly
in equity
14
–
–
(1)
–
13
4
–
(3)
–
1
–
–
–
–
1
72
–
–
–
72
–
–
–
–
72
379
–
(38)
–
341
–
–
(38)
–
303
28
–
(10)
–
18
–
–
(6)
–
12
257
21
–
–
278
–
5
–
–
283
1
–
–
8
9
–
–
–
(9)
–
– (221)
–
74
–
–
(25)
–
49
2012
–
Increase
–
2011
3
295
Decrease
Directly
in equity
31 December
Decrease
Entertaining expenses and
Changes during
31 December the year
11
2011
Goodwill depreciation
As at
the year
Increase
1 January
CCRE
acquisition
As at
EUR 1,000
Formation and start-up
1
–
(1)
–
–
–
–
–
–
–
Intercompany transactions
–
–
–
–
–
597
–
(24)
–
573
24 (273)
8
807
597
5
(94)
(9)
1,306
expenses
elimination
Total deferred tax assets
1,048
The following table sets out the nature of temporary
differences determining the caption “Deferred tax
assets”.
EUR 1,000
Temporary
Tax effect
31 December
31 December
differences as at
Temporary
Tax effect
31 December
31 December
differences as at
as at
2011
%
2011
2012
%
2012
43
31.40
14
40
31.40
13
7
20.80
1
5
18.40
1
261
27.50
72
261
27.50
72
2,733
12.50
341
2,429
12.50
303
60
31.40
18
40
31.40
12
882
31.40
278
900
31.40
283
32
27.50
9
–
27.50
–
Goodwill depreciation
Entertaining expenses and others
Losses carried forward
Patents
as at
Gain on assignment of enterprise
Development costs
Fair value financial investment
available for sale
IPO costs and capital increase costs
236
31.40
74
158
31.40
49
Formation and start-up expenses
–
31.40
–
–
31.40
–
Intercompany transactions elimination
–
31.40
–
1,824
31.40
573
807
5,657
Total deferred tax assets
4,254
As at 31 December 2012, the deferred tax assets
1,306
The deferred tax assets included in the consoli-
mainly include: i) EUR 303 thousand relating to the
dated financial statements as at 31 December 2011
elimination of the gain on assignment of patents
are deemed recoverable on the basis of future eco-
from Cosmo S.p.A. to Cosmo Technologies Ltd.
nomic forecasts. In the analysis of the recoverabil-
which occurred in 2004, net of the deduction for the
ity of this item, analyses, based on the normal esti-
period (EUR 341 thousand in 2011), ii) EUR 283 thou-
mation process that the Management carries out in
sand relating to the difference on the amount of
the preparation of the consolidated financial state-
development costs capitalized in the consolidated
ments, along with and consistent with the impair-
accounts compared to the amount capitalized in the
ment testing of goodwill as well as the assumptions
local statutory financial statements. (EUR 278 thou-
regarding growth that form the basis of future
sand in 2011), iii) EUR 49 thousand relating to the
results forecasts, have been subjected to sensitivity
deferred tax assets on the share capital issue costs
analysis.
directly deducted from equity (EUR 74 thousand in
2011), iv) EUR 573 thousand relating to the adjust-
At the balance sheet date, these analyses have
not highlighted any critical areas that would
ments in order to eliminate the intercompany trans- require adjustments to the deferred tax asset values.
actions in the consolidation process (zero in 2011).
16 Other non-current receivables
18 Trade receivables
The item is detailed as follows:
“Trade receivables” comprises the following:
EUR 1,000
As at 31 December
2012
–
2,251
Tax receivables
–
–
Total other non-current
–
2,251
to guarantee deposits in relation with the rent of
plant, laboratories and related offices and the rent
of equipment with CCRE: due do the acquisition
of company in September 2012, is reduced to zero.
2011
1,271
1,255
Work in progress
730
331
Finished goods
411
472
(220)
(220)
2,192
1,838
Total inventories
961
Non-EU customers
213
620
10
20
2,976
2,607
(27)
(56)
credit note to be issued
EU customers – invoice/credit
note to be issued
Non-EU customers – invoice/
credit note to be issued
Bad debt provision
(32)
(32)
6,235
6,586
from manufacturing of pharmaceutical products
As at 31 December
2012
Depreciation fund
315
The item covers receivables from clients deriving
“Inventories” comprises the following:
materials and consumables
EU customers
Total trade receivables
17 Inventories
Raw materials, auxiliary
2011
2,466
Domestic customers
Domestic customers – invoice/
“Other receivables” as at 31 December 2011 relates
EUR 1,000
2012
2,780
2011
Other receivables
receivables
As at 31 December
EUR 1,000
and supply of related services, net of the provision
for bad debt, and from the royalties with respect to
the licence agreement for Lialda®/Mezavant®/Mesavancol® (Mesalazine MMX®).
19 Current tax assets
“Current tax assets” comprises the following:
EUR 1,000
As at 31 December
2012
2011
Advance payments of
766
1,305
Total current tax assets
766
1,305
The item “Raw materials, auxiliary materials and
consumables” covers the raw materials and packaging materials used by the Group in its manufacturing activity; the item “Work in progress” refers to
income taxes
the “bulk” ready to be packaged and the increase is
mainly due to the work in progress increase of
As at 31 December 2012, “Current tax assets”
MMX® products.
included the refundable tax withheld on the roy-
The value of raw materials in 2012 and 2011
alty payments for EUR 588 thousand (EUR 450
includes a depreciation fund, amounting to EUR 220
thousand as at 31 December 2011) and the residual
thousand, which specifically refers to a slow-mov-
tax credit on research and development activities
ing item.
for EUR 75 thousand (EUR 473 thousand as at 31
December 2011). The residual amount refers to the
advance payments of income taxes (IRES) exceeding the amount due for the year and to the tax
withheld at the source from interest.
20 Other receivables and other assets
21 Cash and cash equivalents
“Other receivables and other assets” comprises the
“Cash and cash equivalents” comprises the following:
following:
EUR 1,000
As at 31 December
EUR 1,000
Government grant
Receivables from other
companies
2012
2012
2011
–
78
18
291
Cash at hand
2,382
1,884
Prepaid expenses
218
2,958
Other prepaid
867
33
3,485
5,244
Total other receivables and
other assets
2011
15
13
Bank accounts
27,287
13,611
Total cash and cash
27,302
13,624
equivalents
VAT receivables
“Bank accounts” include availability on current
bank accounts and short-term “time deposit” bank
contracts.
22 Total shareholders’ equity
“Government grant” of EUR 78 thousand as at 31
“Total shareholders’ equity” comprises the following:
December 2011, was collected during the year 2012.
“Receivables from other companies” at the end
EUR 1,000
tarus according to the strategic collaboration agree- Share capital
ment with Santarus which foresees that starting
from phase III clinical trials, the costs for the US
Budesonide MMX® clinical trial are reimbursed by
Santarus to Cosmo.
“VAT receivables” as at 31 December 2012 will be
partially filed for reimbursement and partially offset in 2013, by payables to social security authorities for contributions and to tax authorities for
income tax on salaries.
“Prepaid expenses” that in 2011 mainly include
advance payments to CCRE for the rent of plant, laboratories, offices and plant equipment for a total
amount of EUR 2,757 thousand, is reduced at the end
of 2012 due to CCRE acquisition.
“Other” refers to advance payments to suppliers
As at 31 December
2012
of 2012 and 2011 refers to the amount due by San-
of goods and services.
As at 31 December
2011
3,749
3,749
Share premium
47,845
47,845
Treasury shares
(16,456)
(24,197)
–
2,162
1,655
1,923
Available for sale financial
51,613
6,897
Retained earnings
16,662
17,212
19,323
7,599
124,391
63,190
210
244
124,601
63,434
Other reserves
assets reserve
Equity attributable to
owners of the company
Total equity
Share capital
As at 31 December 2012 and 2011, Cosmo Pharmaceuticals had 14,995,743 shares issued, fully subscribed
and paid up, each share with a nominal value of
EUR 0.25, for a total share capital of EUR 3,749 thousand.
Share premium
As at 31 December 2012 and 2011, “Share premium”
In 2012, the expense for the stock options allocated
of EUR 47,845 thousand refers to the proceeds from
in March 2012, amounted to EUR 13 thousand (in
the 2007 offering of new shares at the IPO and from
2011 no costs for stock options were accounted, as
the share capital increase for the Cosmo Research &
the vesting period of the SOP granted in 2007
Development S.p.A. (former BioXell) acquisition in
expired on 18 December 2010).
The variance and the reclassification in the
2010.
“Retained earnings” of EUR 281 thousand is due to
Treasury shares
145,716 options exercised during the period, with-
Treasury shares are valued at weighted average cost
out issuing new shares but through the assignment
and have been deducted from equity.
of treasury shares.
As at 31 December 2012, “Stock option plan
As at 31 December 2012, the number of treasury
reserve” refers to the stock option plan granted in
shares amounted to 993,889 (with an average pur-
chase price of CHF 19.96 or EUR 16.56 per share); dur- 2007 and allocated in 2007 and 2012 with vesting
ing the period 1 January 2012 31 December 2012, 620
date 18 December 2010 and 22 March 2015 and expiry
treasury shares were purchased, and 498,039 treas-
date 18 December 2015.
ury shares were sold (of which 145,716 in relation to
the ESOP exercise and 319,823 in relation to the
Available-for-sale financial asset reserve
acquisition of CCRE) with a net gain of EUR 2,049
“Available-for-sale financial asset reserve” is
thousand directly recognized in the equity. In addi-
mainly due to measurement at fair value of San-
tion, EUR 497 thousand of net gain on treasury
tarus shares which are included in the financial
shares transactions of previous periods have been
assets available for sale (see note 14, “Financial
reclassified in Retained earnings.
assets”) without any deferred tax effects due to the
The number of shares outstanding developed as
participation exemption for this investment.
follows:
As at 1 January
2012
2011
13,504,435
14,744,106
“Non controlling interests” refers to minority interests originated in 2010 with the Cosmo Research &
Development S.p.A. (former BioXell) business com-
Treasury shares
Purchased
(620)
(1,239,671)
498,039
–
14,001,854
13,504,435
Sold
As at 31 December
Other reserves
“Other reserves” for the total amount of EUR 2,162
thousand, as at 30 September 2012 have been reclassified in “Retained earnings”.
bination and corresponding to 1.04% of its capital
including non-owners profit (loss) since the acquisition date. After the business combination, the
additional investments in the subsidiary are
accounted as equity transactions, with the gain/
loss accounted in the “Retained earnings”.
In 2012 they decreased by EUR 35 thousand due
to the additional purchase of shares in the subsidiary held by outside investors (0.12% of the capital for
a total consideration of EUR 28 thousand) accounted
as equity transaction, with the gain of EUR 7 thousand accounted in the “Retained earnings”.
As at 31 December 2012 “Non controlling interests” are equal to 0.70% of the equity interest of the
subsidiary Cosmo Research & Development S.P.A.
(former BioXell).
23 Interest-bearing loans and borrowings (non-
Bank loans detail:
Non-current and current “Interest-bearing loans
EUR 1,000
current and current)
As at 31 December
2012
2011
San Paolo IMI
352
693
Credito Valtellinese
107
–
BNL BNP Paribas
111
105
98
94
668
892
and borrowings” are detailed here below:
a) Non-current
As at 31 December
EUR 1,000
2012
2011
Bank loans
2,416
1,284
Total bank loans
2,416
1,284
Financial lease liabilities
8,624
–
Total financial lease
8,624
–
11,040
1,284
liabilities
Total interest-bearing
loans and borrowings
Bank loans (current)
In 2012 the Group has incurred new financial leases
for a total amount of EUR 1,197 for the investment in
plant and machinery for production capacity additions. At the end of September 2012, with the CCRE
acquisition, the Group acquired the obligations in
two financial leases on the real estate complex of
(non current)
Lainate (residual as at 30 September 2012 EUR 8,978
thousand) and one unsecured bank loans (residual
Bank loans detail:
debt as at 30 September 2012 EUR 1,800 thousand).
In 2012 the Group has reimbursed the instal-
As at 31 December
EUR 1,000
2012
2011
–
352
1,693
–
BNL BNP Paribas
175
286
Centrobanca
548
646
2,416
1,284
San Paolo IMI
Credito Valtellinese
Bank loans (non current)
ments in accordance with the contractually foreseen repayment schedules.
As at 31 December 2012, “Bank loans” consisted of:
_ a subsidized loan of initially EUR 882 thousand
at a nominal interest rate of 0.5% p.a., received
on 16 January 2008 for the amount of EUR 637
thousand, on 12 June 2008 for the amount of
b) Current
EUR 164 thousand and on 29 October 2009 for
the amount of EUR 81 thousand from BNL BNP
As at 31 December
EUR 1,000
2012
2011
–
–
Bank loans
668
892
Total bank loans
668
892
1,129
–
Total financial lease
1,129
–
Total interest-bearing loans
1,797
892
Advances on invoices and
bank overdraft
liabilities
and borrowings (current)
Centrobanca
Paribas, pursuant to a grant filed with the Ministry of University and Research for the preclinical activities on the antiandrogen product
CB-03-01, due to expire on 1 July 2015;
_ a subsidized loan of initially EUR 1,169 thousand at a nominal interest rate of 0.816% p.a.,
received on 8 May 2006 for the amount of EUR
643 thousand, on 2 October 2007 for the amount
of EUR 409 thousand and on 9 August 2010 from
Centrobanca S.p.A., pursuant to a grant filed
with the Ministry of Production Activities –
“Bando Tematico Lombardia” – for the research
project for the modified release of butyric acid,
due to expire on 6 October 2018;
_ a subsidized loan of initially EUR 4,853 thousand at a nominal interest rate of 0.5% p.a., disbursed by San Paolo IMI S.p.A. and acquired
with BioXell business combination, due to
expiry on 1 July 2013.
_ An unsecured loan of initially EUR 1,800 thousand at a nominal interest rate of Euribor plus
1.90% disbursed by Credito Valtellinese and
acquired with CCRE acquisition, due to expiry
on 30 September 2017
“Financial lease liabilities” refers to various financial leasing contracts and relates to the real estate
complex of Lainate and to plant and machinery.
24 Employee benefits
The item “Employee benefits” (“trattamento di fine
rapporto”, TFR) only refers to the Italian companies
of the Group and has been determined on an actuarial calculation method, in compliance with IAS 19. It
consists of:
EUR 1,000
As at 31 December
2012
2011
Managers
10
8
Junior managers
54
49
Employees
197
171
Workers
124
132
Employee benefits
385
360
Movements in the period are as follows:
As at
EUR 1,000
Changes during
1 January
the year
2011
Accrued Utilized
As at
31 December
2011
Changes during
the year
Accrued Utilized
As at
31 December
2012
Employee benefits
405
309
(354)
360
358
(333)
385
Total Employee benefits
405
309
(354)
360
358
(333)
385
The principal assumptions for the purpose of the
actuarial valuation were as follows:
2012
2011
Discount rate (EUR compos-
3.22%
4.35%
Inflation rate
2.00%
2.00%
Future salary increase
4.00%
4.00%
ite A yield curve)
(inflation rate included)
Future pension increase
Mortality rate
Average annual
departure rate
n/a
n/a
RGS 48
RGS 48
7.05%
7.05%
Amounts recognized under staff costs in the income
statements are as follows:
EUR 1,000
2012
2011
Costs in the income state-
358
309
Current services cost *
293
276
7
6
58
27
358
309
ments
Interest expenses on
obligation
Actuarial (gains)/losses
*
Of which 283 and 271 respectively for 2012 and 2011,
amount transferred to external fund
25 Deferred tax liabilities
The caption changed as follows:
Changes
As at
Changes
As at
31 December
137
–
–
–
–
–
–
–
Amortisation of patents
(1)
–
–
–
(1)
–
–
1
–
–
(1,909)
–
695
–
(1,214)
–
–
–
–
(1,214)
Amortisation of patents
(208)
–
21
–
(187)
–
–
21
–
(166)
Intangible assets recognized
(746)
–
62
–
(684)
–
–
62
–
(622)
(34)
–
–
–
(34)
–
–
–
–
(34)
Financial lease on
(543)
–
68
–
(475) (1,037)
(35)
177
–
(1,370)
Fair value of loans
(56)
–
16
–
(40)
–
–
14
–
(26)
–
–
–
–
–
–
–
–
(1)
(1)
Cash flow hedges on cur-
(13)
–
3
10
–
–
–
–
–
–
Employee benefits
(20)
–
4
–
(16)
–
–
9
–
(7)
– 1,006
10
(2,651) (1,037)
(35)
284
(1)
(3,440)
and software
Development costs
and software
in business combination
Goodwill
property,plant,equip.
Fair value financial investment available for sale
rency risk-forward contract
Total deferred tax liabilities
(3,667)
2012
Decrease
–
2011
(137)
liabilities
Increase
Other current financial
2011
Increase
Directly
in equity
31 December during the year
Directly
in equity
during the year
Decrease
1 January
CCRE
acquisition
As at
EUR 1,000
The following table sets out the nature of temporary
differences determining the caption “Deferred tax
liabilities”:
EUR 1,000
Temporary
Tax effect
31 December
31 December
differences as at
as at
Temporary
Tax effect
31 December
31 December
differences as at
as at
2011
%
2011
2012
%
2012
–
27.50
–
–
27.50
–
(20)
5.03
(1)
–
3.90
–
Development costs
(9,717)
12.50
(1,214)
(9,717)
12.50
(1,214)
Amortisation of patents and software
(1,497)
12.50
(187)
(1,330)
12.50
(166)
Intangible assets recognized in business
(2,179)
31.40
(684)
(1,980)
31.40
(622)
(108)
31.40
(34)
(108)
31.40
(34)
(1,512)
31.40
(475)
(4,364)
31.40
(1,370)
–
31.40
–
–
31.40
–
(146)
27.50
(40)
(96)
27.50
(26)
Fair value financial investment available
–
27.50
–
(5)
27.50
(1)
Cash flow hedges on currency risk-forward
–
12.50
–
–
12.50
–
(56)
27.50
(16)
(24)
27.50
(2,651)
(17,624)
Other current financial liabilities
Amortisation of patents and software
combination
Goodwill
Financial lease on property,plant,equip.
Inventories
Fair value of loans
for sale
contract
Employee benefits
Total deferred tax liabilities
(15,235)
(7)
(3,440)
As at 31 December 2012, the deferred tax liabilities
mainly include i) EUR 1,214 thousand relating to
temporary differences on the development costs capitalized in the local statutory financial statements
(EUR 1,214 thousand in 2011), ii) EUR 166 thousand
relating to temporary differences deriving from patents and software(EUR 188 thousand 2011), iii) EUR
622 thousand relating to deferred tax emerged in
connection with the value allocated to intangible
assets (patent) recognized in the context of the purchase price allocation process of Bio-Xell business
combination (EUR 684 thousand in 2011), iv) EUR
1,370 thousand relating to temporary differences
deriving from the application of IAS 17 in relation to
finance leases on property, plant and equipment
(EUR 475 thousand in 2011).
26 Trade payables
28 Other current liabilities
“Trade payables” includes the following:
“Other current liabilities” includes the following:
EUR 1,000
Domestic suppliers
As at 31 December
EUR 1,000
2012
2011
2,732
2,988
487
120
35
43
815
499
EU suppliers
Non-EU suppliers
Domestic suppliers –
invoices/credit note
to be received
EU suppliers – invoices/
(117)
485
58
3
4,010
4,138
credit note to be received
Non-EU suppliers – invoices/
credit note to be received
Total trade payables
Social security payables
290
290
VAT payable
640
359
Other liabilities
990
882
12
111
Put options payable
–
3,229
Accrued expenses and
3
3
1,935
4,874
Advances from customers
deferred income
Total other current liabilities
“Social security payables” comprises both the contributions withheld from salaries and the contribu-
“Other liabilities” mainly includes payables to
employees related to accruals of deferred pay ele-
As at 31 December
2012
2011
Withholding tax
202
278
Withholding tax
11
12
Tax payables
4,424
115
Total current tax liabilities
4,637
405
for consultants
2011
lations.
“Current tax liabilities” includes:
for employees
2012
tions due in accordance with current laws and regu-
27 Current tax liabilities
EUR 1,000
As at 31 December
ments, calculated on the basis of the collective labor
agreement currently in force (Contratto Collettivo
Nazionale di Lavoro).
“Put options payable” refers to 186,669 put
options issued in BioXell business combination,
exercised in proximity of the end of the 2011, and
entirely paid in the first days of 2012.
“Accrued expenses and deferred income” refers
to interest on the long-term loans and income for
rent, to be deferred in compliance with the accrual
basis rule.
29 Share-based payment
On 22 March 2012, the Board of Directors
The extraordinary shareholders’ meeting of 14
granted a total of 15,264 options with a vesting
December 2006 authorized the increase of the share
period of three years and an exercise price of CHF 22
capital of a maximum of nominal EUR 378,000
per share, and expiring at 15 April 2015. The fair
with the issuance of 1,513,200 new shares at the
value of options granted, determined on the basis of
service of an employee stock ownership plan
a binomial tree generated by the Fincad program –
(ESOP), to be implemented within the following
technique similar to the Black-Scholes valuation
five years. At the shareholders’ meeting the Board
model –, resulted in a value of CHF 4.06 per option.
of Directors was formally authorized to execute
The options granted are recognized as costs over the
such plan.
vesting period.
On 18 December 2007, the Board of Directors
granted a total of 1,013,568 options with a vesting
In 2012 the expense for the value of employees’ and
period of three years and an exercise price of CHF 22
Directors’ services exchanged for stock options
per share, and expiring at 14 December 2011. The
amounted to EUR 13 thousand, (in 2011 no costs for
fair value of options granted, determined using the
stock options were accounted, as the vesting period
Black-Scholes valuation model, resulted in a value
of the SOP granted in 2007 expired on 18 December
of CHF 3.14 per option.
2010). The exercise of 145,716 SOP in 2012, has been
The general assembly of shareholders on 15 April
2010 revoked the first approval and replaced it by a
settled through the assignment of treasury shares
and no capital increase has occurred.
new approval granting the Board a new authority to
again issue 1,513,200 shares up to 15 April 2015. On
30 April 2010 the Board of Directors decided to extend
the exercise period of the existing plan to 15 April
2015 (originally 14 December 2011).
This modification to the original stock option
plan (SOP) has determined the variation in the fair
value of options: therefore the difference in the fair
value estimated as at 30 April 2010 considering the
original SOP expiring on 14 December 2011 and the
same SOP with extended expiring date to 15 April
2015 (both with vesting date 18 December 2010), was
charged to profit and loss over the residual vesting
period (30 April 2010 – 18 December 2010). The total
variation of fair value amounts to CHF 0.051 per
option, for a total amount of CHF 51,692.
The options granted were recognized as costs
over the vesting period ended on 18 December 2010.
Of the total of 1,013,568 options granted, as at
31 December 2012 852,588 options are outstanding
(after 15,264 options forfeited and 145,716 options
exercised).
Option series
Number
Grant date
Vesting
Expiry date
date
Exercise
Fair value
price
of the op-
tion at the
grant date
1) Issued 18 December 2007
1,013,568
18.12.07
18.12.10
CHF
22
3.14
14.12.11
Expiry date variation
15.04.15
30 April 2010
2) Issued 22 March 2012
CHF
15,264
22.03.12
22.03.15
0.051
15.04.15
2012
22
4.06
2011
Number
Weighted
Number
average
Weighted
average
exercise
exercise
price
price
CHF
Outstanding as at 1 January
CHF
998,304
22
1,013,568
22
15,264
22
–
–
Forfeited during the period
–
–
(15,264)
22
Exercised during the period
(145,716)
22
–
–
Granted during the period
Expired during the period
–
–
–
–
Outstanding as at 31 December
867,852
22
998,304
22
Exercisable as at 31 December
852,588
22
998,304
22
The share options outstanding at the end of the
financial year had an exercise price of CHF 22 and a
weighted average remaining contractual life of
1 year.
Option series 1
Previous monthly average at grant date
share price (in CHF)
Exercise price (in CHF)
Expected volatility
Option life
1) Issued 18
Variation
2007
30 April
December
expiry date
2010
21.16
22
19%
360 days
Expected volatility
Option life
20.29
22
30%
1,200 days
Discount rate due to the vesting period
7.12%
Risk-free interest rate (2007–2011)
0.37%
Risk-free interest rate
2.75%
Risk-free interest rate (2007–2015)
0.93%
Option series 2
2) Issued 22
March 2012
21.15
22
Expected volatility
30%
Option life
24 days
Risk-free interest rate
0.18%
30 Contractual obligation, contingencies and
commitments
The following table sets forth the contractual commitments and principal payments the Group was
obliged to make as of 31 December 2012 and 2011
under debt instruments, financial leases and other
agreements.
Total
EUR 1,000
Bank loans
Less than
1–5 years
1 year
More than
5 years
2,176
892
1,051
233
–
–
–
–
360
–
–
360
8,543
1,456
5,227
1,860
11,079
2,348
6,278
2,453
Bank loans
3,084
668
2,297
119
9,753
1,129
4,958
3,666
385
–
–
385
Employee benefits
Operating lease expenses ¹
Total contractual obligations 31 December 2011
Employee benefits
Operating lease expenses ¹
Total contractual obligations 31 December 2012
1
180
101
79
–
13,402
1,898
7,334
4,170
Not a balance sheet item
“Bank loans” and “Financial lease liabilities” encompass the residual debt for principal.
“Employee benefits” as at 31 December 2012
includes EUR 385 thousand related to required indemnities for termination of employees (“Indennità di
fine rapporto” TFR) of the Italian Group companies.
These obligations are payable to employees upon the
termination of employment and, although in practice a part of this liability may come due within 12
months, this portion is not quantifiable and is conventionally treated as long-term.
“Operating lease expenses” as at 31 December
ber 2006 at an annual fixed rent of EUR 740
2011 mainly refers to the leases from CCRE for plant
thousand. At the expiration of such rent agree-
and offices and equipment at Lainate headquarters:
ment, – CCRE shall provide Cosmo with the gra-
as at 31 December 2012, after CCRE acquisition, they
tuitous use of the same industrial machinery
are reduced to zero.
31 Related parties transactions
and equipment for the following seven years;
_ a lease agreement for the ground floor of an
office building in the Lainate complex starting
The Company is controlled by Cosmo Holding S.p.A.
from 1 June 2008 at an annual rent of EUR 90
(incorporated in Italy) and others as per shareholders’
thousand (six-year duration, renewable at the
agreement, which as at 31 December 2012, together
same terms for an equal period of time), annu-
own 7,487,566 of the Company shares amounting to
ally increased by applying the index measuring
49.93%.
the increase in cost of life in Italy (ISTAT);
Related parties transactions are carried out on
an arm’s-length basis.
_ a lease agreement for the second and third
floor, plus meeting and conference rooms at the
The Board of Directors is notified of any proposed
basement, starting from 1 June 2008 at a rent of
related party transaction; and the Directors involved
EUR 160 thousand (one-year duration, renewa-
must abstain from the related discussion and vote
ble at the same terms for an equal period of
on decisions relating to related parties transactions.
time), annually increased by applying the index
Should the nature, value or specific characteristics
measuring the increase in cost of life in Italy
of a transaction so require, the Board of Directors
(ISTAT).
will draw on the assistance of independent experts.
Lease agreement for Lainate
Cosmo Bioscience Inc. development activities
Cosmo Bioscience Inc., a company also controlled by
The Company’s plant and offices in Lainate are
the same ultimate shareholders as Cosmo Pharma-
owned by Cristoforo Colombo Real Estate S.r.l., that
ceuticals S.p.A., highly experienced in biological
starting from the date of acquisition by the Group
analysis, carried out scientific tests and develop-
(see note 5 “Cristoforo Colombo Real Estate S.r.l.
ment activities for the group in the total amount of
acquisition”) is a fully consolidated subsidiary.
EUR 1,193 thousand consisting of work on a cancer
CCRE leases plant and offices to the Company as per
diagnostic and on Methylene Blue MMX®.
the following agreements:
_ a lease agreement for plant and offices, duration
have been granted to related parties.
six years starting from 1 December 2006 and
In 2012 no guarantees or other commitments
renewable for an equal period of time. The yearly
Key Management personnel compensation
overall initial rent was equal to EUR 1,150 thou-
Key Management personnel consist of the Board of
sand, annually increased by applying the index
Directors and the Executive Management; the table
measuring the increase in cost of life in Italy
below shows the compensation recognized in the
(ISTAT);
profit and loss statement 2012.
_ a rent agreement for the equipment of the
MMX® products plant, such as HVAC, electrical
and mechanical, purified water equipment,
etc., duration five years starting from 1 Decem-
EUR
Board of
Directors
Function
Mauro Ajani
Chairman
Gianluigi
member,
Base
Additional
sation
sation
compen-
(from 20.04.
Cash bonus
compen-
Fringe
Stock
benefits
Total
options
compensation
234,936
–
–
–
–
234,936
30,000
–
–
–
–
30,000
30,000
–
–
–
–
30,000
30,000
–
–
–
–
30,000
177,000
–
70,000
–
–
247,000
30,000
–
–
–
–
30,000
21,000
–
–
–
–
21,000
24,064
–
–
–
–
24,064
577,000
–
70,000
–
–
647,000
12) & CEO
Bertolli
Alessandro
della Cha
Dieter
Enkelmann
non
executive
member,
non
executive
member,
non
executive
Hans
member,
Tanner *
CFO
Christoph
executive
Friedrich
member,
und Halbach
executive
von Bohlen
Maria Grazia
Roncarolo
non
member,
non executive (from
20.04.12)
Rolf Stahel
non executive Chair-
man (until
19.04.12)
Total
*
Compensation as CFO
EUR
No. of
members
Executive Management *
12 members
highest paid of 12 member
*
Base
compen-
Cash bonus
sation
Fringe
Stock
benefits
Total
options
compensation
1,063,834
194,547
17,916
13,322
1,289,619
155,000
70,000
–
–
225,000
Excluding CEO and CFO
The base compensation of Group Executive Manage-
Credit risk
ment is inclusive of the amount contributed by
Credit risk is the risk of financial loss to the Group
Cosmo Group to State and employer defined contri-
if a customer or a counterparty to a financial instru-
bution pension funds.
ment fails to meet its contractual obligations. It
Additional fees and remuneration
Studio Bertolli, through its managing partner-
arises mainly from the Group’s trade receivables and
from cash and cash equivalents.
The Group’s exposure to credit risk is driven by
Gianluigi Bertolli, who is the Company’s Tax-Advi-
the individual characteristics of each customer.
sor on the majority of Italian tax issues: EUR 87
The Group has a series of long-standing customers
thousand.
and has established considerable experience in
Studio Legale Edoardo Ricci e Associati, Milan,
assessing these customers’ credit risk. For these
through the intermediation of Avv. Alessandro
customers, the risk of credit deterioration is moni-
Della Chà, who is the Company’s Legal Advisor on
tored. To this end, the Group follows the develop-
all Italian and many international corporate-mat-
ment of ratings, and where the counterparty is not
ters: EUR 250 thousand.
rated, it relies on proactive market information.
32 Financial risk management objectives and
policies
Financial risk management
When taking on a new client, the Group, where
credit ratings are not available, requests bank references; and if these fail to generate sufficient comfort, may transact only on a prepayment basis. In
The Group’s principal financial liabilities, which
order to reduce the credit risk concentration, the
comprise bank loans, financial leases, and trade
Group’s policy is to limit days receivables allowed to
payables, are mainly created to raise financing for
its major customers and to allocate its cash and
its operations.
equivalents to at least four banks, which as a group
The Group’s financial assets, such as cash and
cash equivalents, trade receivables and other receiv-
may not be active in the same area of activity.
ables, financial assets available for sales, are gener-
Liquidity risk
ated by its operations and managed by the Group’s
Group’s approach to managing liquidity is to ensure,
Treasury.
as far as possible, that it will always have sufficient
The major risks arising from the Group’s finan-
liquidity to meet its liabilities when due, under both
cial instruments are credit risk, liquidity risk and
normal and stressed conditions, without incurring
market risk (primarily interest rate risk and foreign
unacceptable losses or risking damages to the
currency risk). The Group’s Audit Committee period-
Group’s reputation.
ically reviews the policies for managing each of the
above-mentioned risks.
To illustrate the correlation between the finan-
To this end, the Group has invested its cash in
short-term deposits or quickly realizable financial
investments only. Where it has entered into long-
cial instruments and the related risk exposure, a
term financial obligations, these are structured in
description of the policies and the measures adopted
such a way that maturities are evenly spread out.
by the Group to manage its financial risk exposure is
Furthermore, the Group strives to have uncommit-
provided here below.
ted lines of credit available from at least two banks.
The Group rates managing the liquidity risk as
more important than optimizing investment
income.
Market risk
Capital management
Market risk is the risk that changes in market
Group’s capital management objectives are focused
prices, such as foreign exchange rates, interest rates on safeguarding the Group’s capacity to safely exeand equity prices, will affect the Group’s income or
cute the business plan of the Group. To this end, the
the value of its holdings of financial instruments.
Group will not rely on debt to finance any of its
The objective of market risk management is to man-
longer-term capital requirements and will not strive
age and control the market risk exposures within
to maintain an optimal capital structure until its
acceptable parameters, while optimizing the return
income streams reach a high level of predictability.
From time to time, the Group purchases its own
on risk.
shares on the market; and the timing of these purInterest rate risk
chases depends on market prices. Buy and sell deci-
The Group’s exposure to the risk of changes in mar-
sions are made by the CFO after pre-discussion with
ket interest rates relates primarily to the Group’s
the CEO, who was authorized by the shareholders,
cash in bank deposits and equivalent investments,
according to the Italian Civil Code, to buy in the
loans and financial leases with floating interest
market up to maximum 2,999,149 (corresponding to
rates. No material-hedging activities (such as inter-
20% of the share capital) shares of the Company until
est rate swaps) were used during the period under
December 2013.
Neither the Company nor any of its subsidiaries
review.
The Group’s policy is to maintain its investments in variable rate instruments and to have all
its financial obligations in variable rates, thus creat-
are subject to capital requirements imposed by any
regulatory agency or similar body.
With reference to the supplemental disclosures required by IFRS 7, the comments below sup-
ing a natural hedge.
ply details about the measures and mechanisms
Foreign currency risk
implemented by the Group to manage its exposure
The Group is exposed to currency risk on revenues
to financial risks.
and purchases that are denominated in a currency
other than its functional currency (EUR).
The Group intends to work with natural hedges
where possible, matching foreign currency inflows
with out-flows.
Where this is not possible, foreign currency
advice from renowned experts will be sought, and a
decision will then be made to either run the currency risk or to hedge it.
Other market price risk
Equity price risk arises from available-for-sale
equity investments. The Group will from time to
time reassess whether it is opportune to hedge these
investments. Generally, however, it will only enter
into equity investments where it thinks that the
equity value will appreciate and will thus generally
not hedge the market risks.
Classes of financial instruments
Information and financial risk analysis
The table below shows the financial assets and lia-
Credit risk
bilities, as required by IFRS 7 within the framework
Exposure to credit risk
of the different categories contemplated by IAS 39,
The following table shows the trade receivables out-
resulting on 31 December 2012 and 2011.
standing as of 31 December 2012 and 2011, with sepa-
Separate information is provided on current and
rate information on the commercial receivables not
non-current financial liabilities, as required by
yet due (“to come due” line) and those already come
IFRS 7 within the framework of the different catego-
due, with an indication of the period for which they
ries contemplated by IAS 39, resulting on 31 Decem-
are past due (“0–90 days”, “90–120 days” and “more
ber 2012 and 31 December 2011.
than 120 days” lines).
EUR 1,000
The exposure to credit risk as of the end of 2012
As at 31 December
and 2011 is outlined in the following table.
Carrying amount
for sale
Other non current
receivables *
Trade receivables
Other receivables and
other assets **
2012
2011
66,070
18,304
–
2,251
6,235
6,586
18
369
27,302
13,624
(9,753)
–
Subsidized loans
(1,284)
(2,176)
Unsecured bank loans
(1,800)
–
Trade payables
(4,010)
(4,138)
(12)
(3,340)
Other current liabilities **
*
Interest-bearing guarantee deposit
**
Only financial assets/liabilities
EUR 1,000
As at 31 December
Ageing of trade receivables
0–90
2012
2011
55
–
90–120
–
–
120+ days
–
(2)
55
(2)
Total
(allowance for bad debt)
(32)
(32)
Receivables to come due
6,212
6,620
Total trade receivables
6,235
6,586
As at 31 December 2012 and 2011, the item “Other
receivables” does not include overdue positions.
Receivables and write-downs
The Company’s objective is to achieve a balance
The changes in the reserve for the write-down of
between (a) the maintenance of bank credit capac-
commercial and other receivables are shown in the
ity, and (b) flexibility through the use of medium-
following table:
term financing.
The Group monitors its liquidity risk using a
As at 31 December
EUR 1,000
Movement in the reserve
recurring liquidity planning tool. This tool consid-
2012
2011
32
32
Impairment losses recog-
–
–
Amounts written off as
–
–
Amounts recovered during
–
–
Impairment losses reversed
–
–
32
32
for doubtful debts
ers the maturity of its financial assets (e.g., cash
and cash equivalents, accounts receivables and
Balance at beginning
of the year
other financial assets) as well as projected cash
flows from operations.
nised on receivables
Corporate Treasury maintains flexibility in
funding, by maintaining uncommitted credit lines,
uncollectible
and monitors rolling forecasts of the Group’s liquidity reserve (which comprises undrawn borrowing
the year
facility and cash and cash equivalents on the basis
of expected cash flow).
Balance at end of the year
With reference to the maturities of cash flows
related to the Company’s financial exposure, the
reimbursement plans for the medium-term debt are
At present, there are no pending litigations with
deemed important for the purpose of liquidity risk,
reference to Group’s trade receivables, nor has there
particularly considering the nature of the Compa-
been any record of litigations in the past. Never-
ny’s cash flow cycle.
theless, receivables are constantly monitored by the
Here below the debt repayment plans for annual
Management within the context of a risk manage-
periods are presented, to quantify the liquidity risk
ment system, approved by the Board of Directors.
and the necessary cash flows.
Based on past experience, the Group believes that
In this regard it is noted that the quantifica-
the amount recorded in the reserve for doubtful debt
tion of the cash flow payments on non-current
is sufficient in respect to the risk related to trade
financial liabilities is represented by the future
receivables that are not past due; all trade receivables
flows generated by the financial instrument, tak-
relate to customers that have a good track record in
ing into account the contractual repayment plan
the business relations with the Group.
and the future interest rates estimated on the basis
of the IRS interest rates by year as implied by the
Liquidity risk
Euribor curve on 31 December 2012 and 2011.
The liquidity risk is the risk that the Group will
encounter difficulty in meeting future obligations
with respect to financial liabilities, after considering the Company’s cash and cash equivalents’ availability. The risk analysis is aimed at quantifying, on
the basis of contractual maturity, the cash flow in
relation to the reimbursement of the Company’s
financial liabilities as of 31 December 2011 and 2012
as much as they are considered significant for the
purpose of liquidity risk.
EUR 1,000
Carrying
Total
amount
Less than
1–2 years
1 year
2–5 years
More than
5 years
Bank loans
3,084
3,326
749
717
1,736
124
9,753
10,704
1,306
1,329
4,177
3,892
12,837
14,030
2,055
2,046
5,913
4,016
2,176
2,359
955
601
555
248
Total as at
31 December 2012
Bank loans
Total as at
31 December 2011
–
–
–
–
–
–
2,176
2,359
955
601
555
248
Market risk
The actual exposure to such sources of risk is illustrated as of 31 December 2012 and 2011, along with
the possible balance sheet impact of the risk factor’s
plausible variations.
Interest rate risk
The Group is exposed to interest rate risk for its
floating-rate, medium-/long-term debt obligations
and cash and cash equivalents, as identified in the
following tables:
EUR 1,000
31 December 2012
Currency
Interest
Interest
rate
Expiry
Original
Carrying
value
amount
Fixed interest rate
subsidized loans
BNL BNP Paribas
EUR
fixed rate
0.500%
01.07.15
882
286
Centrobanca
EUR
fixed rate
0.816%
06.10.18
1,052
646
San Paolo IMI *
EUR
fixed rate
0.500%
01.07.13
2,456
352
EUR
floating rate
Euribor
30.09.17
1,800
1,800
EUR
floating rate
BNL BNP Paribas Leasing
EUR
BNL BNP Paribas Leasing
Leasint S.p.A.
Credito Valtellinese **
+1.90%
Uncommited/commited
bank overdraft
Various bank (5)
+ various %
Euribor
revocation
until
8,670
–
floating rate
Euribor
+2.70%
from
01.07.17
to 01.01.18
1,197
1,000
EUR
floating rate
Euribor
01.06.18
4,233
4,082
EUR
floating rate
Euribor
27.10.21
4,745
4,671
(various)
Real estate **
Real estate **
*
+1.48%
+1.45%
From BioXell business combination, value at the date of business combination
**
From CCRE acquisition, value at the date of the acquisition
EUR 1,000
31 December 2011
Currency
Interest
Interest
Expiry
rate
Nominal
value
Carrying
amount
Fixed interest rate
subsidized loans
BNL BNP Paribas
EUR
fixed rate
0.500%
01.07.15
882
391
Centrobanca
EUR
fixed rate
0.816%
06.10.18
1,052
740
San Paolo IMI *
EUR
fixed rate
0.500%
01.07.13
2,456
1,045
EUR
floating rate
Euribor
30.04.11
1,320
–
EUR
floating rate
EUR
floating rate
Banca Intesa
+0.80%
Uncommited/commited
bank overdraft
Various bank (5)
+ various %
Euribor
revocation
until
3,220
–
Euribor
from
01.11.08
to 01.06.11
3,942
–
Intesa Leasing (various)
*
+1.00%
From BioXell business combination, value at the date of business
combination
EUR 1,000
31 December 2012
Currency
Cash at hand
Interest
Interest
Various
N/A
Bank accounts various
EUR
floating rate
USD
floating rate
CHF
floating rate
banks (8)
banks (3)
banks (2)
EUR 1,000
Interest
EUR
floating rate
USD
floating rate
CHF
floating rate
banks (2)
amount
N/A
N/A
15
Euribor
N/A
N/A
19,602
Euribor
N/A
N/A
4,622
Euribor
N/A
N/A
3,063
± various %
± various %
± various %
Expiry
rate
N/A
banks (3)
Carrying
value
N/A
Interest
Various
banks (9)
Original
31 December 2011
Currency
Cash at hand
Expiry
rate
Original
Carrying
value
amount
N/A
N/A
N/A
13
Euribor
N/A
N/A
10,783
Euribor
N/A
N/A
2,712
Euribor
N/A
N/A
116
± various %
± various %
± various %
Sensitivity analysis – interest rate risk
Sensitivity analysis – foreign currency risk
The table below provides an indication of the impact
A 10% strengthening of the euro against the US dol-
on the profit before tax of a parallel ± 50 basis-point
lar as at 31 December 2012 would have resulted in a
shift of the rate curve estimated as of 31 December 2012 profit decrease of EUR 2,555 thousand (EUR 343 thousand as at 31 December 2011). A 10% weakening of
and 2011. The analysis was carried out by assuming
that the other variables remained constant, and it was the euro against the US dollar as at 31 December 2012
also carried out for 2012 and 2011 on the basis of the
and 2011 would have had the opposite effect, for the
same assumptions.
equal amount shown above.
The analysis assumes that all other variables,
Profit or (loss)
EUR 1,000
31 December 2012
50 bp
50 bp
increase
decrease
Variable rate instruments
(15)
15
116
(116)
Cash flow sensitivity (net)
101
(101)
31 December 2011
Other market price risk
As a consequence of the Santarus deal (licence
agreement signed on 10 December 2008) the Group
acquired an equity investment in Santarus, whose
shares are listed on the New York Stock Exchange.
This investment represents 12.39% of the common
Profit or (loss)
EUR 1,000
in particular interest rates, remain constant.
50 bp
50 bp
increase
decrease
Variable rate instruments
(1)
1
117
(117)
Cash flow sensitivity (net)
116
(116)
Foreign currency risk
The Group is exposed to currency risk on revenues and
costs that are denominated in a currency other than
the functional currency of the Group (EUR).
It is the Group’s policy to primarily invest its cash
and cash equivalents in euro and only hold shortterm foreign exchange balances in anticipation of
short-term payment obligations in foreign currency.
In June 2012 the management decided to hedge
shares of Santarus.
This equity ownership in Santarus reflects the
Group’s confidence in the long-term value of Santarus’ business: the investment is actively monitored and managed on a fair value basis.
Sensitivity analysis – other market risk
Assuming that the other variables remained constant, a 10% increase in the share price as at 31
December 2012 would have increased equity by
EUR 6,556 thousand (EUR 1,784 thousand as at
31 December 2011); an equal change in the opposite
direction would have decreased equity by EUR 6,556
thousand (EUR 1,784 thousand as at 31 December
2011).
the foreign exchange risk on the excess cash flows in
US dollar, by selling forward, value October 2012, an
amount of USD 10.0 million.
After this forward sale, following consultation
with renowned currency experts, the Company
decided not to sell forward its further excess US dollar
inflows in 2012. At the present time no hedges are in
place but the Company regularly reviews this position.
Share capital and share premium
As at 31 December 2012 and 2011, the authorized
share capital comprised 14,995,743 ordinary shares.
All issued shares are fully paid.
The holders of ordinary shares are entitled to
receive dividends upon shareholders’ resolution;
and they are entitled to one vote per share at the
shareholders’ meetings.
According to the Italian Civil Code, all the rights
for own shares held by the Group are suspended.
EUR 1,000
As at 31 December
2012
2011
Total assets
151,845
78,038
Equity
124,391
63,190
81.9%
81.0%
Equity ratio
Fair values versus carrying amounts of financial
assets and liabilities
This table shows the comparison of fair values versus
carrying amounts of financial assets and liabilities,
as required by IFRS 7.
EUR 1,000
As at 31 December 2012
Carrying
Fair value
Carrying
Fair value
66,070
66,070
18,304
18,304
–
–
2,251
2,251
6,235
6,235
6,586
6,586
amount
Financial assets available for sale
Other non current receivables *
Trade receivables
Other receivables and other assets **
amount
18
18
369
369
27,302
27,302
13,624
13,624
(9,753)
(9,753)
–
–
Subsidized loans
(1,284)
(1,373)
(2,176)
(2,249)
(1,800)
(1,800)
–
–
Trade payables
(4,010)
(4,010)
(4,138)
(4,138)
(12)
(12)
(3,340)
(3,340)
82,766
82,677
31,480
31,407
Other current liabilities **
Unrecognised (loss) gain
*
Interest-bearing guarantee deposit
**
Only financial assets/liabilities
(89)
(73)
Here below a summary of the significant methods
and assumptions used in estimating the fair values
of financial instruments in the table above.
Equity investments
The fair value of the available-for-sale financial
assets is determined by reference to their quoted bid
price at the reporting date.
Subsidized loans
The fair value is calculated based on the present
value of future principal and interest cash flows,
discounted at interest market rate at the reporting
date.
Other current financial liabilities
The fair value is calculated based on the present
value of future principal and interest cash flows,
discounted at interest market rate at the reporting
date.
Fair value hierarchy
The Group uses the following hierarchy for disclosure of the fair value of financial instruments by
valuation technique:
_ Level 1: quoted (unadjusted) prices in active
markets for identical assets or liabilities;
_ Level 2: techniques for which all inputs that
have a significant effect on the recorded fair
value are ob-servable, either directly or indirectly;
_ Level 3: techniques which use inputs that have
a significant effect on the recorded fair value
and which are not based on observable market
data.
As at 31 December 2012 and 2011, the Group held the
following financial instruments measured at fair
value:
EUR 1,000
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
–
–
66,070
–
–
66,070
18,304
–
–
18,304
Assets measured
at fair value
for sale
Equity shares/corporate
bond
For the periods under review the Group did not hold
any financial liabilities measured at fair value.
33 Subsequent events
Budesonide MMX® was approved as Uceris™ for
marketing in the USA for the treatment of patients
with mild to moderate Ulcerative Colitis by the FDA
post year end on 14 January 2013 and approved as
Cortiment™ for marketing in The Netherlands by
the MEB on 31 January 2013 and the process of getting the approval in other EU countries is currently
ongoing.
According to the license agreement with Santarus for the US market, the first sale of Uceris™
triggers a USD 7.0 million payment to Cosmo. The
Company has the option to receive these as shares
and needs to decide on this by 15 April 2013.
Auditors’ report
Independent Auditors' Report on the Consolidated Financial Statements
Independent Auditors’ Report on the Consolidated Financial Statements
Independent Auditors' Report on the Consolidated Financial Statements
To the Board of Directors of
Cosmo
Pharmaceuticals
To the Board
of Directors ofS.p.A.
To
the Board
of Directors S.p.A.
of
Cosmo
Pharmaceuticals
Cosmo Pharmaceuticals S.p.A.
We
have auditedAuditors'
the accompanying
consolidated
financial statements
of Cosmo
Pharmaceuticals S.p.A.,
Independent
Report
on the Consolidated
Financial
Statements
which comprise the income statement, statement of comprehensive income, statement of financial
We have cash
audited
thestatement,
accompanying
consolidated
financial
statements
of Cosmo
S.p.A.,
position,
flows
statement
of changes
in equity
and notes
forCosmo
the Pharmaceuticals
year
ended 31 December
We
have audited
the accompanying
consolidated
financial
statements
of
Pharmaceuticals
S.p.A.,
which
comprise
the
income
statement,
statement
of
comprehensive
income,
statement
of
financial
2012. comprise the income statement, statement of comprehensive income, statement of financial
which
To
the Board
Directors
of
position,
cashof
flows
statement,
statement of changes in equity and notes for the year ended 31 December
position,
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Cosmo Pharmaceuticals S.p.A.statement of changes in equity and notes for the year ended 31 December
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2012.
Board of Director’s Responsibility for the Financial Statements
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M AZARS S PA
We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
C ORSO DI P ORTA V IGENTINA , 35 - 20122 M ILANO
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02 58opinion.
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our
audit
SPA - CAPITALE SOCIALE DELIBERATO €3.500.000,00, SOTTOSCRITTO E VERSATO €2.803.000,00 - Sede LEGALE: C.SO DI PORTA VIGENTINA, 35 - 20122 MILANO
M
AZARS
S PA – REG. IMP. MILANO E COD. FISC. N. 01507630489 - P. IVA 05902570158 - AUTORIZZATA AI SENSI DI L. 1966/39 - REGISTRO DEI REVISORI CONTABILI GU 60/1997
REA
N. 1059307
ALBO
SPECIALE
DELLEVSOCIETÀ
DI ,REVISIONE
CON M
DELIBERA
C
ORSO
DI P ORTA
IGENTINA
35 - 20122
ILANO CONSOB N° 17.141 DEL 26/01/2010
FFICI
I N I 02
TALIA
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- F58
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SPA - CAPITALE SOCIALE DELIBERATO €3.500.000,00, SOTTOSCRITTO E VERSATO €2.803.000,00 - Sede LEGALE: C.SO DI PORTA VIGENTINA, 35 - 20122 MILANO
R144
EA N. 1059307 – REG. IMP. MILANO E COD. FISC. N. 01507630489 - P. IVA 05902570158 - AUTORIZZATA AI SENSI DI L. 1966/39 - REGISTRO DEI REVISORI CONTABILI GU 60/1997
Cosmo Pharmaceuticals Annual Report 2012 – Notes to the consolidated financial statements
ALBO SPECIALE DELLE SOCIETÀ DI REVISIONE CON DELIBERA CONSOB N° 17.141 DEL 26/01/2010
U
IN S
I TALIA
MFFICI
AZARS
PA : B OLOGNA – B RESCIA - F IRENZE - G ENOVA - M ILANO - N APOLI - P ADOVA - P ALERMO - R OMA – T ORINO
C ORSO DI P ORTA V IGENTINA , 35 - 20122 M ILANO
T EL : +39 02 58 20 10 - F AX : +39 02 58 20 14 03 - www.mazars.it
Opinion
Opinion
In our opinion, the consolidated financial statements of Cosmo Pharmaceuticals S.p.A. for the year ended
Opinion
In our
the2012
consolidated
financial
statements
of Cosmo
Pharmaceuticals
S.p.A.offor
the year ended
31opinion,
December
give a true
and fair
view of the
financial
position, the results
operations
and the
In our opinion, the consolidated financial statements of Cosmo Pharmaceuticals S.p.A. for the year ended
31
December
give a true
and
fair view of
the financial
position,
the results
cash flows2012
in accordance
with
International
Financial
Reporting
Standards
(IFRS).of operations and the
31 December 2012 give a true and fair view of the financial position, the results of operations and the
cash
flows in accordance with International Financial Reporting Standards (IFRS).
cash flows in accordance with International Financial Reporting Standards (IFRS).
Milan, 27 March 2013
Mazars S.p.A.
Mazars S.p.A.
Mazars S.p.A.
Carlo Consonni
Carlo Consonni
Partner
Carlo Consonni
Partner
Partner
Information for investors
Capital structure
Stock exchange information
31.12.2012
EUR 1,000
Equity attributable to owners of the Company
3,749
101,319
Profit for the period
19,323
Number of registered shares
14,995,743
Nominal value per share (in EUR)
Major shareholders
Cosmo Holding S.p.A. and
Management (shareholders’
0.25
No.
of shares
% of share
capital
7,487,566
49.93%
dievini Hopp BioTech
1,539,191
10.26%
Heinrich Herz AG
1,160,500
7.74%
457,388
3.05%
AMG Substanzwerte
COPN
ISIN
IT0004167463
Swiss security number
2862650
Number of shares
14,995,743
(Valor)
Research coverage
Jefferies
Peter
CANACCORD Julie
Genuity
Simmonds
Phone: +44 20 7029 8668
Phone: +44 20 7523 8377
Calendar
Key reporting dates
Share price data
CHF
Security ID
Main Board
International Welford
agreement)
Holding GmbH & Co. KG
SIX Swiss Exchange,
124,391
Share capital
Reserves
Listing
Half Year Report – 2 August 2013
Price
Annual Report – April 2014
Date
First trading day close
22.30
12.03.2007
2012 lowest
16.65
11.01.2012
2012 highest
32.85
27.12.2012
2012 last trading day
31.00
28.12.2012
Upcoming conferences
UBS Global Life Sciences Conference
New York, 20 – 22 May 2013
Jefferies’ 2013 Global Life Sciences Conference
New York, 3 – 6 June 2013
Market capitalization
(in CHF million)
464.87
31.12.2012
Jefferies’ 2013 Global Healthcare Conference
London, 20 – 21 November 2013
Share earnings
EUR
Basic earnings per share
31.12.2012
1.41
146 Cosmo Pharmaceuticals Annual Report 2012 – Information for investors
Share price
CHF
35.00
30.00
25.00
20.00
15.00
28.12.2012
28.07.2012
26.02.2012
28.09.2011
30.04.2011
30.11.2010
02.07.2010
01.02.2010
03.09.2009
05.04.2009
05.11.2008
07.06.2008
08.01.2008
10.08.2007
12.03.2007
10.00
Cosmo Pharmaceuticals N (COPN/IT0004167463)
SWX SR PHARM&BIO PR (C4570P/CH0022644642)
SPI® SMALL & MIDDLE PR (SNCIX/CH0000630324)
Trading volumes
320,000
280,000
240,000
200,000
160,000
120,000
80,000
40,000
28.12.2012
28.07.2012
26.02.2012
28.09.2011
30.04.2011
30.11.2010
02.07.2010
01.02.2010
03.09.2009
05.04.2009
05.11.2008
07.06.2008
08.01.2008
10.08.2007
12.03.2007
0
Information for investors – Cosmo Pharmaceuticals Annual Report 2012 147
Glossary
505 (b)2
Autoimmune
Refers to a section of the FDA act which allows a new
A condition in which the body produces antibodies
drug approval application (NDA) that contains full
to its own tissue.
reports of investigations of safety and effectiveness
but where at least some of the information required
Bacteria
for approval comes from studies not conducted by
Single-celled microorganisms that can exist inde-
or for the applicant and for which the applicant has
pendently or dependently upon another organism
not obtained a right of reference. This allows the
for life. They can cause infection and are usually
filing avoiding lengthy, costly and in many cases
treated with antibiotics.
repetitive preclinical trials. Drugs approved under
505 (b)2 generally get 3 or 5 years market exclusivity.
5-aminosalicylic acid
Butyric acid
Is a short-chain fatty acid produced in the colon by
the fermentation of alimentary fibres. It is the
It is a drug derived from salicylic acid used to treat
main physiological fuel for the mucosa cells in the
inflammation of the intestine.
colon.
Abbreviated NDA (ANDA)
Chronic
Is for a proposed drug that is identical to a reference
Lasting a long time.
listed drug. The proponent must prove its bioequivalence. Drugs approved under an ANDA only get
Clinical need
exclusivity of 180 days.
Therapeutic need not covered by drugs that are
Acne
currently marketed.
Skin disorder characterized by inflammation as a
Clinical phase I
result of overactivity of the sebaceous glands.
Phase I trials are the first stage of drug testing on
Acute
human subjects.
Acute often means urgent. An acute disease occurs
Clinical phase II
suddenly.
Once the initial safety of therapy has been confirmed
Alopecia (male-pattern baldness)
in phase I trials, phase II trials are performed on
larger groups (20 – 200) and are designed to assess
Hair follicle disease that involves individuals
clinical efficacy of the therapy, as well as to continue
genetically predisposed.
phase I assessment on a larger group of volunteers
Androgens
Male sex hormones.
Antibiotic
and/or patients.
Clinical phase III
Phase III studies are randomized controlled trials on
large patient groups ( ≥ 200, depending on the condi-
Drug that kills bacteria or prevents them from
tion) and are aimed at producing a definitive assess-
multiplying.
ment of the efficacy of the new therapy, sometimes
AUC (area under the curve)
Term used in pharmacokinetic studies as measure
of systemic absorption.
148 Cosmo Pharmaceuticals Annual Report 2012 – Glossary
in comparison with current “gold standard” treatment.
Clinical trial
Disease activity index (DAI)
A meticulously controlled test of a drug candidate
An index of severity of IBD including subjective and
on humans.
endoscopic evaluations.
Clostridium-Difficile-Associated Diarrhoea
Diverticulitis
(CDAD)
Diarrhoea due to Clostridium Difficile infection.
Cmax
Maximum drug concentration reached in a body
fluid, usually plasma or blood.
Colon
Diverticulitis is a disease of the bowel, in particular
the large intestine, characterized by inflammation
and infection of intestinal diverticula. Diverticula
are finger-shaped dilatations of the intestinal wall.
Dose-finding study
A clinical study designed to determine the efficacy
and safety of different doses to help in the identifi-
The colon is the part of the large intestine between
cation of the most efficacious and well-tolerated
the cecum and the rectum. Its primary purpose is to
dose.
extract water from faeces.
Compliance
Double-blind study
A clinical trial design in which neither the partici-
Compliance with the therapeutic regime imposed
pating individuals nor the study staff know which
by the prescribing doctor.
participants are receiving the experimental drug
C.P.O.
Contract Pharmaceutical Organization, a company
and which are receiving placebo or another active
ingredient (comparator).
that carries out services in the pharmaceutical sec-
Drug delivery system
tor on behalf of third parties.
A technology or method that is able to control the
C.R.O.
time and the extent of the release of a drug.
Contract Research Organization, a company that
Efficacy
carries out research and/or development activities
The ability of a drug to control or cure an illness.
in the pharmaceutical sector on behalf of third
parties.
Crohn’s Disease (CD)
EMEA
European Medicine Evaluation Agency.
It is a type of chronic Inflammatory Bowel Disease
Endogenous
(IBD) that can affect any part of the gastrointestinal
Produced or synthesized within the organism.
tract from mouth to anus.
Cytokines
Any class of substances that are secreted by cells of
the immune system.
Diarrhoea
It is a generally unpleasant condition in which the
Endoscopic activity index (EAI)
An index evaluating the severity of IBD by endoscopic examinations.
Endoscopy
Endoscopy means looking inside and refers to looking inside the human body for medical reasons.
sufferer has frequent watery, loose bowel movements.
Glossary – Cosmo Pharmaceuticals Annual Report 2012 149
Enzyme
Infection
A molecule that includes the conversion of one
A condition resulting from the presence of bacteria
chemical substance to another.
or other microorganisms in the body.
Epidemiologic
Inflammation
Cause and development characteristics of a disease
Swelling, reddening, heat and/or pain produced in
in populations.
the area of the body as a result of irritation, injury
EPO
European Patent Office.
Ethical drugs
Prescription drugs used for treatment of serious
diseases.
Excipient
or infection.
Inflammatory Bowel Disease (IBD)
A group of inflammatory conditions of the bowel,
including Ulcerative Colitis and Crohn’s Disease.
Intestine
The portion of the alimentary tract extending from
the stomach to the anus, consisting of two seg-
An inert substance used as a diluent or vehicle for a
ments, the small intestine and the large intestine
drug.
(or colon).
FDA
Inulin
Food and Drug Administration, the US government
Inulins are a group of naturally occurring oligosac-
agency that governs the entry and monitoring of
charides that are fermented by intestinal bacteria
products on the market.
leading to the production of short-chain fatty acid,
Galenic
including butyric acid.
Galenic formulation deals with the principles of
Investigational New Drug Application (IND)
preparing and compounding medicines in order to
Once the drug has been screened for pharmacologi-
optimize their absorption.
cal activity and acute toxicity potential in animals,
Generic drugs
Drugs equivalent to brand drugs.
Hirsutism
the sponsor must next test its therapeutic potential
for humans. At that point the molecule changes
legal status under the FDA act and becomes a new
drug subject to specific requirements of the drug
regulatory system. An Investigator IND is submitted
Excessive growth of thick hair in women, with a
by the party who both initiates and conducts an
male pattern.
investigation and under whose immediate direction
ICH
the investigational drug is administered or dispensed. Technically the IND is the means through
The International Conference on Harmonization of
which a sponsor obtains the authority to transport
Technical Requirements for Registration of Pharma-
an investigational drug across state lines for clinical
ceuticals for Human Use.
trial purposes. Once the IND is submitted, the
Ileum
The ileum is the final portion of the small intestine.
sponsor must wait for 30 days before initiating
clinical trials.
In vitro
NDA
In an artificial environment, referring to a process
The New Drug Application, a procedure through
or reaction occurring therein, as in a test tube or
which drug sponsors formally propose that the FDA
culture media.
approves a new pharmaceutical for sale and market-
Lesions
ing in the US.
A lesion is any abnormal tissue found on or in an
Nutraceuticals
organism, usually damaged by disease or trauma.
Refers to foods claimed to have an effect on human
Lipophilic
The property of a chemical compound to dissolve in
fats, oils, lipids, and nonpolar solvents.
Lumen
The lumen is the interior of a vessel within the
health. The term includes dietary supplements and
special food.
Off-label
The use of a drug for a medical condition other than
for which it was officially approved and marketed.
body, such as the small central space in an artery or
Onset of action
vein, or any of their relating vessels through which
The length of time it takes for a medicine to start to
blood flows. On a larger scale, the interior of the
work.
gastrointestinal tract may also be referred to as its
lumen.
Mechanism of action
Open-label
A study in which all parties (patient, physician and
study coordinator) are informed of the drug and
The manner by which a drug exerts its activity.
dose being administrated.
Methylene blue
Orphan diseases
Methylene blue is a phenothiazine derivative that is
Diseases characterized by a limited incidence in the
a dye. It was discovered in 1876 and has seen use in
population, generally fewer than five cases per
various medical applications since 1900. One of its
10,000, and for which there are currently no valid
characteristics is that it is not absorbed by
therapies available.
dysplastic/neoplastic cells and thus allows their
detection and demarcation via endoscope.
Monoclonal antibodies
Orphan drug
Drug intended to cure orphan diseases.
Identical antibodies produced by selected and
OTC drugs
restricted B lymphocytes.
Over-the-counter drugs are medicines that may be
NCE
New chemical entity, chemical structure that is not
part of existing technical know-how.
sold without the prescription of a medical professional, in contrast to prescription drugs.
Peptides
Peptides (from the Greek πεπτος, “digestible”) are
the family of short molecules formed from the linking, in a defined order, of various α-amino acids.
Glossary – Cosmo Pharmaceuticals Annual Report 2012 151
Pharmaceutical manufacturing plant
REACH
Facilities for the manufacturing of drugs, subject to
Registration, Evaluation, Authorization and
authorization by specific health authorities.
Restriction of Chemical substances.
Pharmacokinetic
Receptor
The process by which a drug is absorbed, distributed,
A protein complex located inside or on the wall of
metabolized and eliminated by the body.
Pharmacokinetic parameters
the cells characterized by selective binding of a specific substance.
Measures related to drug absorption and elimination
Rectum
rates that are useful to evaluate the behavior of the
The last part of the large intestine.
drugs after administration to a living organism
(such as Cmax, Tmax, AUC, etc.).
Pivotal study
Registration
Authorization required to market a drug.
Usually a phase III study that presents the data that
Seborrhoea
the governmental agencies responsible for approving
A skin disease characterized by increase of sebum
the marketing of pharmaceutical products (e.g.,
associated or not to inflammation.
the FDA and the EMEA) use to decide whether or not
to approve a drug.
Placebo
Drug with no active ingredients.
Probiotic bacteria
Technology platform
Technology applied to various molecules generating
certain products.
Tmax (time to maximum concentration)
Term used in pharmacokinetic studies to indicate
Microorganisms normally present in the intestine,
the time after administration when the maximum
producing beneficial effects.
concentration in a body fluid is obtained.
Proof-of-concept study
Ulcerative Colitis (UC)
Phase IIa clinical trials, usually conducted within
Ulcerative Colitis is a form of Inflammatory Bowel
the target patient group, to determine whether the
Disease (IBD). The disease is located only in the
considerable resources necessary to complete drug
colon, and is characterized by presence of mucosal
development should be invested.
ulcerations. The main symptoms of active disease
Prophylaxis
A method to prevent a disease.
Randomized/Randomization
The procedures ensuring that the subjects are
equally and randomly distributed to treatment
or control groups.
are usually abdominal pain and Diarrhoea mixed
with blood of gradual onset.
Concerning forward-looking statements
This report contains certain “forward-looking
statements,” which can be identified by the use of
terminology such as “could,” “might,” “propose,”
“addressable,” “outlook,” “attractive” or similar
wording. Such forward-looking statements reflect
the current views of the Management and are not
guarantees of future performance and involve risks
and uncertainties. Readers are cautioned that
actual results may differ materially from those in the
forward-looking statements as a result of various
factors. Cosmo is providing the information in this
report as of this date and does not undertake any
obligation to update any forward-looking statements
contained in it as a result of new information,
future events or otherwise.
Forward-looking statements – Cosmo Pharmaceuticals Annual Report 2012 153
Contacts and addresses
Cristoforo Colombo Real Estate S.r.l.
Via Cristoforo Colombo, 1
20020 Lainate (Milan)
Italy
Italy
Phone: +39 02 9333 7614
Phone: +39 02 9333 7614
Fax:
Fax:
+39 02 9333 7663
+39 02 9333 7663
www.cosmopharma.com
Cosmo S.p.A.
Cosmo Technologies Ltd.
1st floor, Connolly Building
42–43 Amiens Street
Dublin 1
Italy
Ireland
Phone: +39 02 9333 7614
Phone: +353 181 70 370
Fax:
Fax:
+39 02 9333 7663
+353 182 30 718
Cosmo Research & Development S.p.A.
Investor and public relations
Chris Tanner, CFO and Head of Investor Relations
Phone: +39 02 9333 7617
Italy
Fax:
+39 02 9357 1445
ctanner@cosmopharma.com
Phone: +39 02 9333 7276
Fax:
+39 02 9333 7663
Publications and further information
investor.relations@cosmopharma.com
Imprint
© 2013 Cosmo Pharmaceuticals S.p.A.
Phone: +39 02 9333 7614
Fax:
+39 02 9333 7663
Concept
IRF Communications AG, Zurich
Graphic design, illustrations and production
TGG Hafen Senn Stieger, St. Gallen
Portrait and Board photography
Carlo Bevilacqua, www.carlobevilacqua.com
Illustrations of Scientific Board members,
Jan Feindt, www.janfeindt.de
20020 Lainate (Milan) Italy
Phone: +39 02 9333 7614
Fax:
+39 02 9333 7663
www.cosmopharma.com

Annual Report 2012 - Cosmo Pharmaceuticals NV

Transcription

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